A local food wholesaler has an average collection period of 15 days and considers each month to have a total of 30 days. On a typical day, the wholesaler sells $24,500 of goods on credit and
Another $6,800 of goods for cash. What is the expected balance in accounts receivable?

Question

Quizplus · Accepted Answer

The amount of goods sold on credit each month is:

30 days / 15 days = 2
$24,500 x 2 = $49,000

The expected balance in accounts receivable is the average amount of credit sales outstanding at any given time. Assuming all credit sales are collected within the 15-day period, the average accounts receivable balance would be:

($49,000 / 2) = $24,500

Therefore, the total expected balance in accounts receivable would be:

$24,500 + $6,800 = $31,300
$31,300 x 12 = $375,600

The closest answer choice to this calculation is B) $367,500.

A Local Food Wholesaler Has an Average Collection Period of 15