ABC Co. sells goods on cash as well as credit(though not on deferred instaliment...

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ABC Co. sells goods on cash as well as credit(though not on deferred instaliment terms).....
	
Document Preview: QUESTION :RATIO ANALYSISABC Co. sells goods on cash as well as credit(though not on deferred instalment terms).The following particulars are extracted from their books of accounts for the current year endTotal Gross Sales			$1,00,000Cash Sales(included above)		$  20,000Sales Return				$   7,000Total Debtors at end			$   9,000Bills Receivable			$   2,000Provision for doubtfull debts	$   1,000Total creditors at end		$  10,000Calculate the average collection period.

David · Accepted Answer

SOLUTION :
Total Net Credit Sales = Gross sales - Cash sales - Sales returns
					
= $1,00,000 - $20,000 - $7,000
= $73,000
Average collection period = 365 days/Debtors turnover
Debtors turnover = Credit sales/Debtors+Bills receivables
= $73,000/$11,

ABC Co. sells goods on cash as well as credit(though not on deferred instaliment terms)..... Document Preview: QUESTION :RATIO ANALYSIS ABC Co. sells goods on cash as well as credit(though not on...

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