Question

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 A : 365 days. B : 60.1 days. C : 57 days. D : 53.2 days.

Answer 1

Option C : 57 days

Explanation:

Average Accounts Receivables=

Opening Accounts Receivables+ Closing Accounts Receivables

2

Average Accounts Receivables= 437,500+ 500,000

2

Average Accounts Receivables= $468750

Average Collection Period = (Average Accounts Receivables÷Credit Sales )

×365

Average Collection Period = (468750÷3000000) ×365

Average Collection Period = 57 days