Winter Clothing Store had a balance in the Accounts Receivable account of $780,000 at the beginning of the year and a balance of $820,000 at the end of the year. Net credit sales during the year amounted to $5,840,000. The collection period of the receivables was
A) 30 days.
B) 365 days.
C) 100 days.
D) 50 days.

Question

Quizplus · Accepted Answer

The average accounts receivable is ($780,000 + $820,000) / 2 = $800,000. The receivables turnover ratio is $5,840,000 / $800,000 = 7.3. The collection period is 365 / 7.3 ≈ 50 days.

Winter Clothing Store Had a Balance in the Accounts Receivable