Granger Corporation had $180,000 in sales on account last year.The beginning accounts receivable balance was $10,000 and the ending accounts receivable balance was $18,000.The corporation's average collection period was closest to:
A) 20.3 days
B) 28.4 days
C) 36.5 days
D) 56.8 days

Question

Quizplus · Accepted Answer

Average accounts receivable balance = ($10,000 + $18,000) ÷ 2 = $14,000
Accounts receivable turnover = Sales on account ÷ Average accounts receivable balance
= $180,000 ÷ $14,000 = 12.86
Average collection period = 365 days ÷ Accounts receivable turnover
= 365 days ÷ 12.86 = 28.4 days

Granger Corporation Had $180,000 in Sales on Account Last Year