A local food wholesaler has an average collection period of 15 days and considers each month to have a total of 30 days. On a typical day, the wholesaler sells $24,500 of goods on credit and another $6,800 of goods for cash. What is the expected balance in accounts receivable?
A) $360,700
B) $367,500
C) $374,300
D) $735,000
E) $741,800

Question

Quizplus · Accepted Answer

The expected balance in accounts receivable can be calculated by multiplying the daily credit sales by the average collection period. Daily credit sales are $24,500. The average collection period is 15 days. Therefore, the expected balance in accounts receivable is $24,500 * 15 = $367,500. Cash sales do not affect accounts receivable.

A Local Food Wholesaler Has an Average Collection Period of 15