The financial statements of Midwest Tours are given below.
-Refer to the financial statements of Midwest Tours.The firm's average collection period for 2009 is __________.
A)69.35
B)69.73
C)68.53
D)67.77
E)68.52

Question

The financial statements of Midwest Tours are given below. 
-Refer to the financial statements of Midwest Tours.The firm's average collection period for 2009 is __________.
A)69.35 
B)69.73 
C)68.53 
D)67.77 
E)68.52

Quizplus · Accepted Answer

The average collection period is calculated as (365 days * Average accounts receivable) / Net credit sales. For 2009, the average accounts receivable is ($1,250,000 + $1,300,000) / 2 = $1,275,000. The net credit sales are $10,000,000. Therefore, the average collection period is (365 days * $1,275,000) / $10,000,000 = 69.35 days.

The Financial Statements of Midwest Tours Are Given Below