Answer:
Average collection period = 52.21 days
Step-by-step explanation:
given data
accounts receivable balance = $470,000
accounts balance = $560,000
Net credit sales = $3,600,000
solution
we know that Debtor turnover ratio = Net credit sales ÷ Average receivable ...........1
so here
Average receivable =
Average receivable = 515000
so from equation 1
Debtor turnover ratio =
Debtor turnover ratio = 6.990 times
so
Average collection period of the receivables = 365 days ÷ Debtor turnover ratio
Average collection period =
Average collection period = 52.21 days