Question

On average, your firm sells $33,100 of items on credit each day. The average inventory period is 35 days and your operating cycle is 55 days. What is the average accounts receivable balance

Answer 1

The average account receivable balance is $662,000

Step-by-step explanation:

The computation of the average account receivable balance is shown below:

= Sells items on credit each day × (operating cycle - average inventory period)

= $33,100 × (55 days - 35 days )

= $33,100 × 20 days

= $662,000

hence, the average account receivable balance is $662,000. The same is to be considered