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?

Answer 1

Average Collection Period = 57.03

Step-by-step 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 =
`(437,500+500,000)/(2)`

average account receivable = $468750

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

so Average Collection Period will be

Average Collection Period =
`(468750)/(3000000)` × 365

Average Collection Period = 57.03