Marie's Clothing Store had an accounts receivable balance of $420,000 at the beginning of the year and a year-end balance of $510,000.Net credit sales for the year totaled $2,100,000.The average collection period of the receivables was:
A)41 days.
B)52 days.
C)81 days.
D)91 days.

Question

Quizplus · Accepted Answer

The average collection period is calculated as (Average Accounts Receivable / Net Credit Sales) * 365. The average accounts receivable is ($420,000 + $510,000) / 2 = $465,000. Thus, the average collection period is ($465,000 / $2,100,000) * 365 = 81 days.

Marie's Clothing Store Had an Accounts Receivable Balance of $420,000