Question

Net credit sales = $400,000 Net income = $100,000 Average total assets = $80,000 Average accounts receivable = $20,000 What is the average collection period in days (rounded to the nearest whole day)?

Answer 1

73 days

Step-by-step explanation:

average collection period = number of days in a period / receivables turnover

receivables turnover = revenue / average receivables = $100,000 / $20,000 = 5

average collection period = 365 / 5 = 73 days

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