Question

Granger Corporation had $208,000 in sales on account last year. The beginning accounts receivable balance was $25,000 and the ending accounts receivable balance was $29,000. The corporation's average collection period was closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

the average collection period is $27,000

Step-by-step explanation:

The computation of the average collection period is shown below:

The Average collection Period is

= (365 × Average Accounts Receivable) ÷ sales Revenue

= (365 × $27,000) ÷ $208,000

= 47.38 days

The average account receivable is

= ($25,000 + $29,000) ÷ 2

= $27,000

hence, the average collection period is $27,000