Financial Reporting and Analysis Q189

189Faddy Corporation reported revenue of 150, 000 for 2011. The income reported was 65,000. The opening balance of the accounts receivables account was $40,000 and the closing balance was $52,000. Assuming a 360-day year, what are the days of sales outstanding for Faddy Corporation?

Option : A
Explanation : Days of sales outstanding
= (Number of days in the period) / (Receivables turnover)
= (Number of days in the period) / (Revenue / (Average Receivables))
Days of sales outstanding
= 360 / (150,000 / ((40,000 + 52,000) / 2)) ) = 110.4

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