Find the average payment period if accounts payable is 550,000, cost of goods sold is $654,000, and sales are $5,000,000.
A) 4.0
B) 25.5
C) 31.1
D) None of these

Question

Quizplus · Accepted Answer

Average Payment Period = (Accounts Payable / Cost of Goods Sold) x 365

= (550,000 / 654,000) x 365

= 307.25 days

Therefore, the average payment period is 31.1 days rounded off to one decimal place. Therefore, the best choice is option C.

Find the Average Payment Period If Accounts Payable Is 550,000