Piper, Inc. had net sales of $2,700,000 during 2016. On January 1, 2016, Piper’s accounts receivable were $640,000. On December 31, 2016, Piper’s accounts receivable were $800,000.
What was Piper’s average collection period for 2016? Please provide calculations so I can learn, thank you!
Select one: A. 108.1 days B. 15.5 days C. 48.7 days D. 97.3 days
Average collection period is determined as follows: 365 days in a year divided by accounts receivable ratio.
Accounts receivable ratio= Net sales/(average accounts receivable during the period)
Therefore, in the above question, first determine the accounts receivable ratio=$2,700,000/(($640,000+$800,000)/2)
=3.75 times
therefore, average collection period=365/3.75=97 days
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report net sales of $676,200,000. Accounts receivable are
$62,500,000 at the beginning of the year and $87,900,000 at the end
of the year. (Round answers to 2 decimal places, e.g.
50.27. Use 365 days for calculation.)
Compute Sage Hill’s accounts receivable turnover.
Accounts receivable
turnover
times
Compute Sage Hill’s average collection period for accounts
receivable in days.
Average collection period for
accounts receivable
days
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