The financial statements of Georgi Manufacturing Company report net sales of $595000 and accounts receivable of $80000 and $60000 at the beginning and end of the year respectively. What is the average collection period for accounts receivable in days?

Question

Quizplus · Accepted Answer

Average Collection Period = (Accounts Receivable / Net Sales) x Number of Days in the Year

Number of Days in the Year = 365
Accounts Receivable at beginning of the year = $80,000
Accounts Receivable at end of the year = $60,000
Net Sales = $595,000

Average Collection Period = (($80,000 + $60,000) / 2 / $595,000) x 365 = 42.9 days.

Therefore, the answer is C, 42.9 days.

The Financial Statements of Georgi Manufacturing Company Report Net Sales