For the Prince Company,the average age of accounts receivable is 60 days,the average age of accounts payable is 45 days,and the average age of inventory is 72 days.Assume a 360-day year.If Prince's annual sales are $936,000,what is the firm's average accounts receivable balance?
A) $104,000
B) $118,000
C) $156,000
D) $212,000
E) $260,000

Question

Quizplus · Accepted Answer

The firm's average accounts receivable balance can be calculated using the formula: (Average Age of Accounts Receivable / 360) * Annual Sales. Plugging in the given values: (60 / 360) * $936,000 = 1/6 * $936,000 = $156,000.

For the Prince Company,the Average Age of Accounts Receivable Is