Guttery Corporation has provided the following financial data from its balance sheet: Sales on account in Year 2 totaled $1,450,000 and cost of goods sold totaled $900,000.The company's average sale period for Year 2 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) 65.6 days
B) 226.6 days
C) 43.8 days
D) 70.6 days

Question

Guttery Corporation has provided the following financial data from its balance sheet:  Sales on account in Year 2 totaled $1,450,000 and cost of goods sold totaled $900,000.The company's average sale period for Year 2 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) 65.6 days 
B) 226.6 days 
C) 43.8 days 
D) 70.6 days

Quizplus · Accepted Answer

First, we need to calculate the average accounts receivable for the year:

Beginning accounts receivable + Ending accounts receivable / 2

($200,000 + $150,000) / 2 = $175,000

Next, we can calculate the average daily sales:

Annual sales on account / 365 days

$1,450,000 / 365 = $3,972.60

Finally, we can calculate the average sale period:

Average accounts receivable / Average daily sales

$175,000 / $3,972.60 = 44.05 (rounded to two decimal places)

Therefore, the closest answer choice is A) 65.6 days.

Guttery Corporation Has Provided the Following Financial Data from Its