If Boyd Corporation has sales of $2 million per year (all credit)and days sales outstanding of 35 days,what is its average amount of accounts receivable outstanding (assume a 360 day year)?
A) $194,444
B) $57,143
C) $5,556
D) $97,222
E) $285,714

Question

Quizplus · Accepted Answer

The average amount of accounts receivable outstanding is calculated by dividing the annual sales by 360 days and then multiplying by the days sales outstanding (DSO). So, for Boyd Corporation, it's ($2,000,000 / 360) * 35 = $194,444.

If Boyd Corporation Has Sales of $2 Million Per Year