A firm has sales of $1.9 million, and 15 percent of the sales are for cash....
A firm has sales of $1.9 million, and 15 percent of the sales
are for cash. The year-end accounts receivable balance is
$210,000.
What is the average collection period? (Use a 360-day year.
Do not round intermediate calculations. Round your final answer to
2 decimal places.)
Average collection period __________ days?
Homework Answers
| Ans. | Average collection period = No. of days in year / Receivables turnover | |
| 360 / 7.69 | ||
| 46.81 days | ||
| Receivables turnover = Net credit sales / Receivables | ||
| 1615000 / 210000 | ||
| 7.69 times | ||
| *Net credit sales = Total sales - Cash sales | ||
| 1900000 - (1900000 * 15%) | ||
| 1900000 - 285000 | ||
| 1615000 | ||
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