Data from Kooistra Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,270 and the cost of goods sold was $770.
-The average collection period for Year 2 is closest to:
A)0.9 days
B)38.8 days
C)40.2 days
D)1.1 days

Question

Data from Kooistra Corporation's most recent balance sheet appear below:  Sales on account in Year 2 amounted to $1,270 and the cost of goods sold was $770.
-The average collection period for Year 2 is closest to:
A)0.9 days 
B)38.8 days 
C)40.2 days 
D)1.1 days

Quizplus · Accepted Answer

Accounts receivable turnover = Sales on account F1F1F1S1F1F1F10 Average accounts receivable balance
= $1,270 F1F1F1S1F1F1F10 $135* = 9.41
*Average accounts receivable balance = ($140 + $130)F1F1F1S1F1F1F10 2 = $135
Average collection period = 365 days F1F1F1S1F1F1F10 Accounts receivable turnover
= 365 days F1F1F1S1F1F1F10 9.41 = 38.8 days

Data from Kooistra Corporation's Most Recent Balance Sheet Appear Below