A company with net sales of $500,000,a beginning balance of net receivables of $80,000,and an ending balance of net receivables of $90,000 has a collection period of:

Question

Quizplus · Accepted Answer

First, calculate the average net receivables:
(80,000 + 90,000) ÷ 2 = 85,000

Then, divide the average net receivables by the daily credit sales:
85,000 ÷ (500,000 ÷ 365) =

85,000 ÷ 1,369.86 ≈ 62

Therefore, the collection period is 62 days.

A Company with Net Sales of $500,000,a Beginning Balance of Net