Net credit sales are normally sold on terms of n/30. Net credit sales total $50,000 and average gross accounts receivable total $5,000 in the current period. The collection period is:

Question

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The collection period is calculated by dividing the average gross accounts receivable by the net credit sales and multiplying by 365 days. In this case, the collection period is $5,000 / $50,000 * 365 days = 36.5 days.

Net Credit Sales Are Normally Sold on Terms of N/30