Question

​Fisher's Furniture Store sells ​$900 comma 000 worth of furniture to customers on credit each month. The Accounts Receivable balance in the accounting books averages ​$1.8 million. On​ average, how long are customers taking to pay their​ bills?

Answer 1

On​ average, The number of days customers taking to pay their​ bills are 60.8 days

Step-by-step explanation:

The number of days customers taking to pay their​ bills = The average accounts receivable turnover in days = The number of days Fisher's Furniture Storecollect the cash from sale = 365/Accounts receivable turnover

Accounts receivable turnover = Net Credit Sales (for year) /Average Accounts Receivable = $900,000 x 12/$1,800,000 = $10,800,000/$1,800,000 = 6 times

The number of days customers taking to pay their​ bills = 365/6 = 60.8 days