Bhattia Inc. has credit terms of 2/15, net 60. Based on experience, 70% of all customers will take the discount. Given this information, calculate average collection period.
A) 27.00 days
B) 28.50 days
C) 30.00 days
D) 31.50 days
E) 33.00 days

Question

Quizplus · Accepted Answer

The average collection period can be calculated by taking into account the percentage of customers who take the discount and those who don't. For the 70% who take the discount, the collection period is 15 days. For the remaining 30%, it's 60 days. The calculation is as follows: (70% * 15 days) + (30% * 60 days) = 10.5 days + 18 days = 28.5 days.