Excerpts from Shelton Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,320 and the cost of goods sold was $890.
-The average sale period for Year 2 is closest to:
A) 246.1 days
B) 49.2 days
C) 55.4 days
D) 33.2 days

Question

Excerpts from Shelton Corporation's most recent balance sheet appear below:  Sales on account in Year 2 amounted to $1,320 and the cost of goods sold was $890.
-The average sale period for Year 2 is closest to:
A) 246.1 days 
B) 49.2 days 
C) 55.4 days 
D) 33.2 days

Quizplus · Accepted Answer

To calculate the average sale period, we need to use the following formula:

Average sale period = (Accounts receivable / Average daily credit sales)

First, we need to calculate the accounts receivable balance:

Accounts receivable = $35 + $110 + $70 + $80 = $295

Next, we need to calculate the average daily credit sales:

Average daily credit sales = (Sales on account / Number of days in the year) = ($1,320 / 365) = $3.62

Finally, we can calculate the average sale period:

Average sale period = ($295 / $3.62) = 81.43 days or approximately 55.4 days (rounded to the nearest tenth)

Therefore, the closest answer is (C) 55.4 days.

Excerpts from Shelton Corporation's Most Recent Balance Sheet Appear Below