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Blaney Clothing Store had a balance in the Accounts Receivable account of $437,500 at the beginning of the year and a balance of $500,000 at the end of the year. Net credit sales during the year amounted to $3,000,000. The average collection period of the receivables in terms of days was?

Respuesta :

Answer:

Average Collection Period = 57.03

Explanation:

given data

Accounts Receivable beginning =  $437,500

Accounts Receivable ending =   $500,000

Net credit sales = $3,000,000

to find out

average collection period

solution

we get here first average account receivable that is express as

average account receivable = [tex]\frac{437,500+500,000}{2}[/tex]

average account receivable = $468750

and we consider No of Days in a year is = 365

so Average Collection Period will be

Average Collection Period = [tex]\frac{468750}{3000000}[/tex] × 365

Average Collection Period = 57.03

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