Granger Corporation had $180,000 in sales on account last year. The beginning accounts receivable balance was $10,000 and the ending accounts receivable balance was $18,000. The corporation's average collection period was closest to: (Round your intermediate calculations to 2 decimal places.)
A) 20.3 days
B) 28.4 days
C) 36.5 days
D) 56.8 days

Question

Quizplus · Accepted Answer

Average Collection Period = (Accounts Receivable / Annual Credit Sales) x 365 days

Annual Credit Sales = $180,000

Beginning Accounts Receivable = $10,000 
Ending Accounts Receivable = $18,000 
Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2 = ($10,000 + $18,000) / 2 = $14,000

Average Collection Period = ($14,000 / $180,000) x 365 days 
= 28.3 days

Therefore, the closest answer choice is B) 28.4 days.

Granger Corporation Had $180,000 in Sales on Account Last Year