Answer: $400,000
Explanation:
Days Sales Outstanding is used by a firm to estimate the amount of its accounts receivable.
DSO (Days Sales Outstanding) = Accounts Receivables/Average Sales per day
Where DSO= 20 days
Average sales per day= $20,000
Accounts receivable (AR) =?
20=AR/20000
Cross multiply to make AR the subject of the formula
Accounts Receivables = 20 x 20000
AR=$400,000.
