Question

The financial statements of the Skysong, Inc. reports net sales of $372000 and accounts receivable of $60000 and $31200 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days?
a. 4.5 times
b. 8 times
c. 9 times
d. 10.3 times

Answer 1

Answer:

It will be 8.15 times which is not in the given option

Explanation:

We have given that net sales = $372000

Account receivable at the beginning = $60000

And account receivable at the end = $31200

Average account receivable $=\frac{60000+31200}{2}= 45600$

We know that account receivable turnover is given by

Account receivable turnover = $\frac{net\ sales}{average\ account\ receivable}=\frac{ 372000}{ 45600}=8.15times$

Which is not in the given option