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Given below are comparative balance sheets and an income statement for Eleva Corporation.
All sales were made on account.Cash dividends declared during the year totaled $22,984.
-Eleva Corporation's days to collect accounts receivable for 2018 is:
A)54.7 days.
B)67.3 days.
C)88.0 days.
D)94.0 days.

Question

[The following information applies to the questions displayed below.]
Given below are comparative balance sheets and an income statement for Eleva Corporation.
   All sales were made on account.Cash dividends declared during the year totaled $22,984.
-Eleva Corporation's days to collect accounts receivable for 2018 is:
A)54.7 days. 
B)67.3 days. 
C)88.0 days. 
D)94.0 days.

Quizplus · Accepted Answer

To calculate the days to collect accounts receivable, we need to use the formula: 
(days in period / accounts receivable turnover ratio)
Days in period = 365 days
Accounts receivable turnover ratio = net credit sales / average accounts receivable
Net credit sales for 2018 = $527,425 - $472,263 = $55,162
Average accounts receivable for 2018 = ($39,438 + $59,517) / 2 = $49,477.50
Accounts receivable turnover ratio = $55,162 / $49,477.50 = 1.1144
Days to collect accounts receivable = 365 / 1.1144 = 327.6 days
Therefore, the answer is B) 67.3 days.

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