Question

Walker Clothing Store has a balance in the Accounts Receivable account of $390k at the beginning of the year and a balance of $410k at the end of the year. Net credit sales during the year amounted $2mil. The average collection period of the receivables in terms of days was

Answer 1

Answer: The average collection period of the receivables in terms of days was 73 days.

Step-by-step explanation:

Given that,

Accounts Receivable at the beginning of the year = $390,000

Accounts Receivable at the end of the year = $410,000

Net credit sales during the year = $2,000,000

Average collection period of the receivables in terms of days:

Average accounts receivables =
`(410000 + 390000)/(2)`

= 4,00,000

Net credit sales =
`(2000000)/(400000)` = 5

∴ Accounts receivable days =
`(365)/(5)`

= 73 days

The average collection period of the receivables in terms of days was 73 days.