Edgology's balance in accounts receivable is $240,000.Annual credit sales are $2 880,000.Edgology's average collection period is [blank].
A)12 days
B)30.4 days
C)2.5 days
D)There is not enough information

Question

Quizplus · Accepted Answer

To calculate the average collection period, we need to divide accounts receivable by average daily credit sales:
Average daily credit sales = Annual credit sales / 365 = 2,880,000 / 365 = 7,890.41
Average collection period = Accounts Receivable / Average daily credit sales 
= 240,000 / 7,890.41
= 30.41 or approximately 30.4 days. Therefore, the best choice is B.

Edgology's Balance in Accounts Receivable Is $240,000