The financial statements of the Melton Manufacturing Company report net sales of $360,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year and the end of the year, respectively.What is the average collection period for accounts receivable in days?
A)81.1
B)40.6
C)50.7
D)30.4

Question

Quizplus · Accepted Answer

The average accounts receivable is ($50,000 + $30,000) / 2 = $40,000. The accounts receivable turnover is $360,000 / $40,000 = 9 times. The average collection period is 365 days / 9 = 40.6 days.

The Financial Statements of the Melton Manufacturing Company Report Net