Table 3.1 Information (2019 values)
1.Sales totaled $110,000
2.The gross profit margin was 25 percent.
3.Inventory turnover was 3.0.
4.There are 360 days in the year.
5.The average collection period was 65 days.
6.The current ratio was 2.40.
7.The total asset turnover was 1.13.
8.The debt ratio was 53.8 percent.
-Accounts receivable for CEE in 2019 was ________.(See Table 3.1)

Question

Table 3.1  Information (2019 values)
1.Sales totaled $110,000
2.The gross profit margin was 25 percent.
3.Inventory turnover was 3.0.
4.There are 360 days in the year.
5.The average collection period was 65 days.
6.The current ratio was 2.40.
7.The total asset turnover was 1.13.
8.The debt ratio was 53.8 percent.
-Accounts receivable for CEE in 2019 was ________.(See Table 3.1)

Quizplus · Accepted Answer

We can use the formula for average collection period to find the accounts receivable:
Average Collection Period = (Accounts Receivable / Credit Sales) x Number of Days in Year
65 = (Accounts Receivable / 110,000) x 360
Accounts Receivable = (65/360) x 110,000 = $19,861, which is closest to option B.

Table 3.1 Information (2019 Values)