A firm ended the year with an average collection period of 50 days. The firm's credit sales were $11 million. What is the firm's year-end balance in accounts receivable?
A) $1.27 million
B) $0.85 million
C) $1.51 million
D) $2.05 million

Question

Quizplus · Accepted Answer

The average collection period is the average number of days it takes for a firm to collect its receivables. To find the year-end balance in accounts receivable, you can use the formula: (Average Collection Period / 365 days) * Credit Sales. Plugging in the given values: (50 / 365) * $11,000,000 = $1.51 million.

A Firm Ended the Year with an Average Collection Period