Question

A company has a DSO of 28 days. The company’s average daily sales are $4,000. What is the level of accounts receivable? Assume there are 365 days in a year.

Answer 1

the level of accounts receivable is $112,000

Step-by-step explanation:

The computation of the level of sales is shown below:

Days Sales Outstanding (DSO) = Accounts Receivable (A/R) ÷ Average Daily Sales

28 days = Account receivable ÷ $4,000

So, the account receivable is

= $4,000 × 28 days

= $112,000

Hence, the level of accounts receivable is $112,000

We simply applied the above formula so that the correct value could come

And, the same is to be considered