Question

The financial statements of the Blue Spruce Corp. report net sales of $384000 and accounts receivable of $56400 and $36000 at the beginning of the year and the end of the year, respectively. What is the average collection period for accounts receivable in days

Answer 1

44 days

Step-by-step explanation:

First, we have to calculate accounts receivable turnover Blue Spruce Inc.

= $384,000 / [($56,400 + $36,000) / 2 ]

= $384,000 / $46,200

= 8.31 times

Then, to calculate the average collection period for accounts receivable, it will be :

= 365 days / 8.31

= 43.92

= 44 days aprox.