Stinkey sells 2,250 units of its perfume collection each year at a price per unit of $199.All sales are on credit with terms of 2/7, net 30.The discount is taken by 91 percent of the customers.What is the average amount of the company's accounts receivable?
A)$11,126
B)$11,246
C)$11,003
D)$14,815
E)$14,778

Question

Quizplus · Accepted Answer

The average amount of accounts receivable is the average sales per day multiplied by the average collection period. The average sales per day is the annual sales divided by 365 days, which is 2,250 units * $199 / 365 days = $12.50. The average collection period is the credit period minus the discount period, which is 30 days - 7 days = 23 days. Therefore, the average amount of accounts receivable is $12.50 * 23 days = $287.50.

Stinkey Sells 2,250 Units of Its Perfume Collection Each Year