The following balance sheet information was provided by Western Company: $$\begin{array} { l r r }
\text { Assets } & \text { Year 2 } & \text { Year } 1 \
\text { Cash } & \$ 4,000 & \$ 2,000 \

\text { Accounts receivable } &15,000 & 12,000\
\text { Inventory } & \$ 35,000 & \$ 38,000
\end{array}$$
Assuming Year 2 net credit sales totaled $270,000,what was the company's average days to collect receivables? (Use 365 days in a year.Do not round your intermediate calculations.)
A) 18.25 days
B) 47.31 days
C) 16.22 days
D) 20.28 days

Question

The following balance sheet information was provided by Western Company: $$\begin{array} { l r r } 
\text { Assets } & \text { Year 2 } & \text { Year } 1 \
\text { Cash } & \$ 4,000 & \$ 2,000 \

\text { Accounts receivable } &15,000 & 12,000\
\text { Inventory } & \$ 35,000 & \$ 38,000 
\end{array}$$
 Assuming Year 2 net credit sales totaled $270,000,what was the company's average days to collect receivables? (Use 365 days in a year.Do not round your intermediate calculations.)
A) 18.25 days
B) 47.31 days
C) 16.22 days
D) 20.28 days

Quizplus · Accepted Answer

Average days to collect receivables = (365 days * Average accounts receivable) / Net credit salesAverage accounts receivable = (Beginning accounts receivable + Ending accounts receivable) / 2= (12,000 + 15,000) / 2= 13,500Average days to collect receivables = (365 days * 13,500) / 270,000= 18.25 days

The Following Balance Sheet Information Was Provided by Western Company