Question

Sunland Company had a balance in the Accounts Receivable account of $801000 at the beginning of the year and a balance of $901000 at the end of the year. Net credit sales during the year amounted to $8049000. The average collection period of the receivables in terms of days was:_______

a) 4 days.
b) 36.5 days.
c) 37 days.
d) 38.4 days.

Answer 1

d) 38.4 days

Step-by-step explanation:

Accounts receivable = 801,000 + 901,000 = 1,702,000

Average Account receivables = 1,702,000 / 2 = 851,000

Net credit sales = $8,049,000 / 851,000 = 9.5

The average collection period of the receivables in terms of days = 365 days / 9.5 =38.4 days

Accounts receivable days = 38.4 days