The financial statements of Hudson Manufacturing Company report net sales of $400,000 and accounts receivable of $50,000 and $30,000 at the beginning and end of the year, respectively.What is the average collection period for accounts receivable in days?

Question

Quizplus · Accepted Answer

Average Collection Period = (Accounts Receivable / Net Sales) * Number of Days

= (($50,000 + $30,000) / 2) / $400,000 * 365

= $40,000 / $400,000 * 365

= 36.5 days

Therefore, the average collection period for accounts receivable is 36.5 days, which is option B.

The Financial Statements of Hudson Manufacturing Company Report Net Sales