Question

Graber Company had $130,000 in sales on account last year. The beginning accounts receivable balance was $18,000 and the ending accounts receivable balance was $12,000. The company's average collection period was closest to: Select one: a. 33.69 days b. 42.12 days c. 84.23 days d. 50.54 days

Answer 1

b. 42.12 days

Step-by-step explanation:

Calculation for Graber company's average collection period will be:

Using this formula

Average collection period =Sales/[(Beginning accounts receivable +Ending accounts receivable)/2]

Let plug in the formula

130,000/[(18,000 + 12,000)/2]

=130,000/(30,000/2)

130,000/15,000

= 8.66days

Hence,

365/8.666666

=42.12 days

Therefore Graber company's average collection period will be 42.12 days