Learning Journal AR turnover ratio Week 5 PDF

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mandatory assignment and the grade was good...

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Learning Journal Chart 1 Beginning Account Receiveable Ending Account Receiveable Net Credit Sales Average AR AR Turnover Ratio Number of days sales in receiveable ratio

ABC Group 123 Company $ 75.000 $ 92.000 $ 125.000 $ 123.000 $ 324.000 $ 401.000 $ 100.000 $ 107.500 3,24 3,73 112,65

97,849

A. 1. The Account Receivable Turnover Ratio formula is net credit sales/average AR. The average AR formula is the beginning + ending account receivable / 2. Average Account Receivable = $100,000 (ABC Group) and $ 107,500 (123 Company) Account Receivable Turnover Ratio formula is Net Credit Sales / Average AR. is 3,24 (ABC Group) and 3,73 (123 Company) A. 2. Number of days sales in receivable ration in ABC group formula is number of days in a year / AR turnover ratio. Number of days sales in receivable ratio is 112,65 (ABC Group) and 97,84 (123 Company) A. 3. "The number of days' sales in receivables ratio shows the expected number of days it will take to convert accounts receivable into cash" (Franklin et al, 2020). In this statement describe that the smaller amount the AR ratio, is the better. As an investor, I would like to invest in 123 Company, the firm collects money faster from the customer compare with the ABC Group. Chart 2

Beginning Inventory Purchases Goods available for sale Ending inventory

Balance Sheet Year 1 $ 29.000 $ 10.000 $ 39.000 $ 10.826

Income Statement Year 1

Balance Sheet Year 2 $ 10.826 $ 7.435 $ 18.261 $ 5.980

Income Statement Year 2

Cost of good sold Average Inventory Inventory turnover ratio Number day of sales Average daily cost of good

$

28.174

$ 19.913,00

$

12.281

$ 8.403,00

1,414854618 257,9770356

1,461501845 249,7430991 77,19

33,65

B. Inventory turnover ratio = cost of good / average inventory Average inventory = (beginning inventory + ending inventory) / 2 Average inventory year 1 = ($ 29,000 + $ 10,826) / 2 = $ 19,913 Average inventory year 2 = ($ 10,826 + $ 5,980) / 2 = $ 8,403 Inventory turnover ratio year 1 = $ 2,8174 / $ 19,913 = 1.414 Inventory turnover ratio year 2 = $ 12,821 / $ 8,403 = 1.461 C. Number of days sales in receivable ratio = 365 / inventory turnover ratio Year 1 = 365 / 1.414 = 257.977 Year 2 = 365 / 1.461 = 249.743 1. Average Account Receivable = $100,000 (ABC Group) and $ 107,500 (123 Company). Number of days sales in receivable ratio is 112,65 (ABC Group) and 97,84 (123 Company). Number of days sales in receivable ratio is 112,65 (ABC Group) and 97,84 (123 Company). Average inventory year 1 = ($ 29,000 + $ 10,826) / 2 = $ 19,913 Average inventory year 2 = ($ 10,826 + $ 5,980) / 2 = $ 8,403 Inventory turnover ratio year 1 = $ 2,8174 / $ 19,913 = 1.414 Inventory turnover ratio year 2 = $ 12,821 / $ 8,403 = 1.461 Number of days sales in receivable ratio Year 1 = 365 / 1.414 = 257.977 Number of days sales in receivable ratio Year 2 = 365 / 1.461 = 249.743. 2. In this learning journal, I did not find any difficulty to complete the chart and all the assignment, because everything in this basic accounting are related to my daily life in my job. That I have to know the whole process of Account Receivable of my clients because I’m managing a client. Completing this learning journal is easier when we use the Excel sheet. 3. Related the whole course, in the beginning I am so struggle because last time I learned about accounting when I was in high school. It was so hard to complete the balance sheet, financial statement, etc. When I follow the reading assignment, do all the exercise, I can handle it and now I do understand the process of basic accounting. Reference: Franklin,M., Graybeal, P., Dixon, C. (2019). Principles of accounting,volume 1: Financial accounting. Retrieved from https://openstax.org/details/books/principles-financial-accounting...