The financial statements of Danielle Manufacturing Company report net sales of $750,000 and accounts receivable of $60,000 and $90,000 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) * Days in a Year

= ($75,000 / (($60,000 + $90,000) / 2)) * 365 days

= ($75,000 / $75,000) * 365 days

= 365 days

Therefore, the average collection period for accounts receivable in days is 36.5.

The Financial Statements of Danielle Manufacturing Company Report Net Sales