Ribaudo Corporation has provided the following financial data from its balance sheet and income statement:

-The company's average collection period (age of receivables) for Year 2 is closest to:
A)70.1 days
B)1.1 days
C)72.1 days
D)1.0 days

Question

Ribaudo Corporation has provided the following financial data from its balance sheet and income statement:

-The company's average collection period (age of receivables) for Year 2 is closest to:
A)70.1 days 
B)1.1 days 
C)72.1 days 
D)1.0 days

Quizplus · Accepted Answer

The average collection period is calculated by dividing the average accounts receivable by the annual credit sales and multiplying by 365 days. The average accounts receivable is $1,260,000 and the annual credit sales are $18,000,000. Therefore, the average collection period is 1,260,000 / 18,000,000 * 365 = 70.1 days.

Ribaudo Corporation Has Provided the Following Financial Data from Its