Days' sales uncollected means the average collection period. It means how many days are required to collect the cash for its sales.
This can be calculated using two items which are account receivables and net sales. Account receivables are the proceeds of payment to be received from customers who have been sold goods on credit. Net sales are the gross sales minus returns, discounts and interests.
In this ques, days' sales uncollected equals 53.874 days which is approximately 54 days.
It is given that the net sales of the company are $29800 and account receivables are $4400.
Days' sales uncollected can be calculated as:
= (AR÷NS)×365
where, AR= Account receivables
NS = Net Sales
In this ques,
AR = $4400
NS = $29800
Thus,
Days' sales uncollected = (AR÷NS)×365
= (4400÷29800)×365
= 0.1476 ×365
= 53.874
Thus, days' sales uncollected equals 53.874 days which is approximately 54 days.
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