Zemrowski Company has the following data available:
$\begin{array} { l }
\text {Credit Sales for the year ended December 31,2015 }&\$500 \
\text { Cash Sales for the year ended December 31,2015 }&\$ 400\
\text {Cost of Goods Sold for the year ended December 31,2015 }&\$290 \
\text { Total Accounts Receivable, December 31, 2015}&\$200 \
\text {Total Accounts Receivable, December 31, 2014 }&\$100 \
\text { Total Inventory, December 31, 2015}&\$200 \
\text {Total Inventory, December 31, 2014 }&\$250 \
\end{array}$

What is the average collection period for the fiscal year ending December 31,2015?
A) 110 days
B) 150 days
C) 220 days
D) 283 days

Question

Zemrowski Company has the following data available:
$\begin{array} { l  }
 \text {Credit Sales for the year ended December 31,2015 }&\$500 \
 \text { Cash Sales for the year ended December 31,2015 }&\$ 400\
 \text {Cost of Goods Sold for the year ended December 31,2015  }&\$290 \
 \text { Total Accounts Receivable, December 31, 2015}&\$200 \
 \text {Total Accounts Receivable, December 31, 2014 }&\$100 \
 \text {  Total Inventory, December 31, 2015}&\$200 \
 \text {Total Inventory, December 31, 2014 }&\$250 \
\end{array}$

What is the average collection period for the fiscal year ending December 31,2015?
A) 110 days
B) 150 days
C) 220 days
D) 283 days

Quizplus · Accepted Answer

The average collection period is calculated as $ \text{Average Accounts Receivable} / \text{Average Daily Credit Sales} $. Average Accounts Receivable is $ (200 + 100) / 2 = 150 $. Credit Sales for the year is $500, so Average Daily Credit Sales is $ 500 / 365 = 1.37 $. Therefore, the average collection period is $ 150 / 1.37 = 109.49 $, which rounds to approximately 110 days.

Zemrowski Company Has the Following Data Available What Is the Average Collection Period for the Fiscal Year