Data from Keniston Corporation's most recent balance sheet and income statement appear below: The average collection period for this year is closest to:

Question

Data from Keniston Corporation's most recent balance sheet and income statement appear below:  The average collection period for this year is closest to:

Quizplus · Accepted Answer

Average accounts receivable balance = ($128,000 + $114,000)÷ 2 = $121,000
Accounts receivable turnover = Sales on account ÷ Average accounts receivable balance
= $813,000 ÷ $121,000 = 6.72 (rounded)
Average collection period = 365 days ÷ Accounts receivable turnover
= 365 days ÷ 6.72 = 54.3 days (rounded)

Data from Keniston Corporation's Most Recent Balance Sheet and Income