Marcell Company's average collection period (age of receivables)for 20 × 6 was closest to:
A) 15.7 days.
B) 22.6 days.
C) 25.8 days.
D) 36.9 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, Marcell Company's average accounts receivable was $1,200,000 and its annual credit sales were $4,000,000. Therefore, the average collection period is (1,200,000 / 4,000,000) * 365 = 15.7 days.

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