Hartzog Corporation's most recent balance sheet and income statement appear below: Dividends on common stock during Year 2 totaled $60 thousand. Dividends on preferred stock totaled $5 thousand. The market price of common stock at the end of Year 2 was $7.04 per share.
-The average collection period for Year 2 is closest to:
A)0.9 days
B)70.3 days
C)1.1 days
D)67.6 days

Question

Hartzog Corporation's most recent balance sheet and income statement appear below:   Dividends on common stock during Year 2 totaled $60 thousand. Dividends on preferred stock totaled $5 thousand. The market price of common stock at the end of Year 2 was $7.04 per share.
-The average collection period for Year 2 is closest to:
A)0.9 days 
B)70.3 days 
C)1.1 days 
D)67.6 days

Quizplus · Accepted Answer

Accounts receivable turnover = Sales on account F1F1F1S1F1F1F10 Average accounts receivable balance
= $1,350 F1F1F1S1F1F1F10 $250* = 5.40
*Average accounts receivable balance = ($260 + $240)F1F1F1S1F1F1F10 2 = $250
Average collection period = 365 days F1F1F1S1F1F1F10 Accounts receivable turnover
= 365 days F1F1F1S1F1F1F10 5.40 = 67.6 days

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