Jackson, Inc. had net sales of $900,000 during 2019. On January 1, 2019, Jackson's accounts receivable were $160,000. On December 31, 2019, Jackson's accounts receivable were $200,000.
What was Jackson's average collection period for 2019?

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Quizplus · Accepted Answer

Average collection period = (Average accounts receivable / Net sales) x 365 daysAverage accounts receivable = (Beginning accounts receivable + Ending accounts receivable) / 2= ($160,000 + $200,000) / 2= $180,000Average collection period = ($180,000 / $900,000) x 365 days= 0.2 x 365 days= 73 days