LMN reported the following 2014 data in 000's: LMN's average age of the receivables was (in days): (Assume 360 days in a year)

Question

LMN reported the following 2014 data in 000's:  LMN's average age of the receivables was (in days): (Assume 360 days in a year)

Quizplus · Accepted Answer

To calculate the average age of receivables, we use the formula:

Average Age of Receivables = (Accounts Receivable / Total Credit Sales) x 365

From the given data, we can find that:

Accounts Receivable = $207,000
Total Credit Sales = $2,860,000

Therefore, the average age of receivables for LMN is:

= ($207,000 / $2,860,000) x 365
= 26.573 x 365
= 9,699.545 days

Rounded to the nearest whole number, the average age of receivables is 91 days. Thus, the correct answer is C.

LMN Reported the Following 2014 Data in 000's: LMN's