Summer Fashions had a balance in the Accounts Receivable account of $660,000 at the beginning of the year and a balance of $720,000 at the end of the year.Net credit sales during the year were $5,350,000.The average collection period of the receivables was
A)45 days.
B)47 days.
C)49 days.
D)93 days.

Question

Quizplus · Accepted Answer

Average Collection Period = (Accounts Receivable / Net Credit Sales) x Number of Days in Year

Number of days in year = 365

Avg. Collection Period = ((660,000 + 720,000)/2) / 5,350,000 x 365

Avg. Collection Period = 690,000 / 5,350,000 x 365

Avg. Collection Period = 47 days

Summer Fashions Had a Balance in the Accounts Receivable Account