Granger Company had $180,000 in sales on account last year.The beginning accounts receivable balance was $10,000,and the ending accounts receivable balance was $18,000.The company's average collection period (age of receivables)was closest to which of the following? Do not round intermediate calculations.

Question

Quizplus · Accepted Answer

To calculate the average collection period, we need to find the average number of days it takes for customers to pay their accounts.
First, we need to calculate the accounts receivable turnover:
Accounts Receivable Turnover = Sales on Account / Average Accounts Receivable
Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2
Average Accounts Receivable = ($10,000 + $18,000) / 2 = $14,000
Accounts Receivable Turnover = $180,000 / $14,000 = 12.857
Next, we need to calculate the average collection period:
Average Collection Period = 365 / Accounts Receivable Turnover
Average Collection Period = 365 / 12.857 = 28.39 days
Therefore, the answer is B, 28.39 days.

Granger Company Had $180,000 in Sales on Account Last Year