If Challenge Corporation has sales of $2 million per year (all credit)and an average collection period of 35 days,what is its average amount of accounts receivable (assume a 360-day year)?
A)$194,444
B)$57,143
C)$5,556
D)$97,222

Question

Quizplus · Accepted Answer

The average accounts receivable can be calculated using the formula: (Average Collection Period / 360 days) * Total Sales. So, (35/360) * $2,000,000 = $194,444.

If Challenge Corporation Has Sales of $2 Million Per Year