Grast Company had $170,000 in sales on account last year. The beginning accounts receivable balance was $14,000 and the ending accounts receivable balance was $16,000. The company's average collection period was closest to:
A) 32.21 days
B) 30.06 days
C) 64.41 days
D) 34.35 days

Question

Quizplus · Accepted Answer

The average collection period is calculated as (Average Accounts Receivable / Sales on Account) * 365. The average accounts receivable is ($14,000 + $16,000) / 2 = $15,000. Thus, ($15,000 / $170,000) * 365 = 32.21 days.

Grast Company Had $170,000 in Sales on Account Last Year