Trendy Traders reported total sales amounting to $1,000,000 in the year 2015,of which 80% were on credit.At 31 December,customers owed $100,000.If the firm operates for 365 days a year,how long,on average,does it take to collect money from its debtors?
A) 29 days.
B) 13 days.
C) 10 days.
D) 46 days.

Question

Quizplus · Accepted Answer

The average collection period is calculated as (Accounts Receivable / Credit Sales) * 365. Here, Accounts Receivable is $100,000, and Credit Sales are 80% of $1,000,000, which is $800,000. So, (100,000 / 800,000) * 365 = 45.625, approximately 46 days.

Trendy Traders Reported Total Sales Amounting to $1,000,000 in the Year