Freiman Corporation's most recent balance sheet and income statement appear below: The average collection period for Year 2 is closest to:

Question

Freiman Corporation's most recent balance sheet and income statement appear below:   The average collection period for Year 2 is closest to:

Quizplus · Accepted Answer

Accounts receivable turnover = Sales on account ÷ Average accounts receivable balance*
= $1,310 ÷ $230 = 5.70 (rounded)
*Average accounts receivable balance = ($220 + $240)÷ 2 = $230
Average collection period = 365 days ÷ Accounts receivable turnover
= 365 days ÷ 5.70 = 64.0 days (rounded)

Freiman Corporation's Most Recent Balance Sheet and Income Statement Appear