A firm has daily credit sales of $50,000, and its average collection period is 50 days. Its average debtors balance is:

Question

Quizplus · Accepted Answer

To find the average debtors balance, we can use the formula:

Average debtors balance = (Daily credit sales x Average collection period) / 365

Substituting the given values, we get:

Average debtors balance = (50,000 x 50) / 365 = $6,849.31

Therefore, the best choice is option D, which is $2,500,000.

A Firm Has Daily Credit Sales of $50,000, and Its