The following information is available for the Wetzel Company:
$\begin{array} { l }
\text {Net income for the year ended December 31,2014 }&\$127.4\
\text {Credit sales for the year ended December 31,2014 }&\$1,606.0\
\text {Retained earnings, December 31,2014 }&150.0\
\text {Retained earnings, December 31, 2013 }&180.0\
\text {Total assets, December 31, 2014 }&470.0\
\text {Total assets, December 31, 2013 }&442.0\
\text { Total liabilities, December 31, 2014}&240.0\
\text { Total liabilities, December 31, 2013}&182.0\
\text {Accounts Receivable, December 31, 2014 }&180.0\
\text {Accounts Receivable December 31,2013 }&144.0\
\end{array}$

What is the average collection period in days for the year ended December 31,2014?
A) 5.0
B) 36.8
C) 40.9
D) 77.3

Question

The following information is available for the Wetzel Company:
$\begin{array} { l  }
 \text {Net income for the year ended December 31,2014 }&\$127.4\
 \text {Credit sales for the year ended December 31,2014 }&\$1,606.0\
 \text {Retained earnings, December 31,2014 }&150.0\
 \text {Retained earnings, December 31, 2013 }&180.0\
 \text {Total assets, December 31, 2014 }&470.0\
 \text {Total assets, December 31, 2013 }&442.0\
 \text { Total liabilities, December 31, 2014}&240.0\
 \text { Total liabilities, December 31, 2013}&182.0\
 \text {Accounts Receivable, December 31, 2014 }&180.0\
 \text {Accounts Receivable December 31,2013 }&144.0\
\end{array}$

What is the average collection period in days for the year ended December 31,2014?
A) 5.0
B) 36.8
C) 40.9
D) 77.3

Quizplus · Accepted Answer

The average collection period is calculated as $ \text{Average Collection Period} = \frac{\text{Average Accounts Receivable}}{\text{Credit Sales per Day}} $. Average Accounts Receivable is $ \frac{180 + 144}{2} = 162 $. Credit Sales per Day is $ \frac{1606}{365} \approx 4.4 $. So, the average collection period is $ \frac{162}{4.4} \approx 36.8 $ days.

The Following Information Is Available for the Wetzel Company What Is the Average Collection Period in Days for the