Ribaudo Corporation has provided the following financial data from its balance sheet and income statement: The company's average collection period (age of receivables)for Year 2 is closest to:

Question

Ribaudo Corporation has provided the following financial data from its balance sheet and income statement:  The company's average collection period (age of receivables)for Year 2 is closest to:

Quizplus · Accepted Answer

Accounts receivable turnover = Sales on account ÷ Average accounts receivable*
= $1,290,000 ÷ $247,500 = 5.21 (rounded)
*Average accounts receivable =
($255,000 + $240,000)÷ 2 = $247,500
Average collection period = 365 days ÷ Accounts receivable turnover
= 365 days ÷ 5.21 = 70.1 days (rounded)

Ribaudo Corporation Has Provided the Following Financial Data from Its