The financial statements of the Melton Manufacturing Company reports net sales of $300,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days?

Question

Quizplus · Accepted Answer

The average collection period is calculated as (Average Accounts Receivable / Net Sales) * 365. The average accounts receivable is ($50,000 + $30,000) / 2 = $40,000. Thus, ($40,000 / $300,000) * 365 = 48.7 days.

The Financial Statements of the Melton Manufacturing Company Reports Net