Oratz Company's average collection period (age of receivables)for 20 × 6 was closest to:
A) 29.1 days.
B) 40.3 days.
C) 41.6 days.
D) 57.6 days.

Question

Quizplus · Accepted Answer

The average collection period is calculated by dividing the average accounts receivable by the annual credit sales and multiplying by 365 days. For 20×6, Oratz Company's average accounts receivable was $1,230,000 and its annual credit sales were $4,200,000. Therefore, the average collection period is (1,230,000 / 4,200,000) * 365 = 29.1 days.

Oratz Company's Average Collection Period (Age of Receivables)for 20 ×