Marcial Company's average collection period (age of receivables)for 20 × 6 was closest to:

Question

Quizplus · Accepted Answer

The average collection period is calculated by dividing the average accounts receivable by the annual credit sales and multiplying by 365 days. For 20×6, Marcial Company's average accounts receivable was $1,230,000 and its annual credit sales were $4,920,000. Therefore, the average collection period is (1,230,000 / 4,920,000) * 365 = 24.6 days.

Marcial Company's Average Collection Period (Age of Receivables)for 20 ×