The Rye Corporation has provided the following information:
Total sales were $1,200,000.
Beginning net accounts receivable was $45,000.
Ending net accounts receivable was $65,000.
Sales returns and allowances totaled $100,000.
What was Rye's average collection period?

Question

The Rye Corporation has provided the following information:
 Total sales were $1,200,000.
 Beginning net accounts receivable was $45,000.
 Ending net accounts receivable was $65,000.
 Sales returns and allowances totaled $100,000.
What was Rye's average collection period?

Quizplus · Accepted Answer

Receivable turnover ratio (20) = Net sales ($1,200,000 - $100,000) /Average net accounts receivable ($55,000*). *Average net accounts receivable ($55,000) = [beginning net accounts receivable ($45,000) + ending net accounts receivable ($65,000)] / 2.

The Rye Corporation Has Provided the Following Information