Marie's Clothing Store had an accounts receivable balance of $420,000 at the beginning of the year and a year-end balance of $580,000.Net credit sales for the year totaled $3,600,000.The average collection period of the receivables was: (Round any intermediary calculations to two decimal places and your final answer to the nearest day. )
A)43 days.
B)59 days.
C)51 days.
D)8 days.

Question

Quizplus · Accepted Answer

Average receivables = ($420,000 + $580,000)÷ 2 = $500,000
Receivable turnover = $3,600,000 ÷ $500,000 = 6.92
Days' receivables outstanding = 365 ÷ 7.20 = 51 days

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