Financial statements for Maraby Corporation appear below: Maraby Corporation's average collection period for Year 2 was closest to:

Question

Financial statements for Maraby Corporation appear below:   Maraby Corporation's average collection period for Year 2 was closest to:

Quizplus · Accepted Answer

Accounts receivable turnover = Sales on account ÷ Average accounts receivable balance
= $1,960 ÷ $175* = 11.2 (rounded)
*Average accounts receivable balance = ($190 + $160)÷ 2 = $175
Average collection period = 365 days ÷ Accounts receivable turnover (see above)
= 365 days ÷ 11.2 = 32.6 days (rounded)

Financial Statements for Maraby Corporation Appear Below: Maraby