Question

Q 8.18: The financial statements of the Harrison Company report net sales of $200,000 and accounts receivable of $10,000 and $5,000 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days

Answer 1

Answer:

The answer is $13.5 days

Explanation:

The average collection period for accounts receivable in days in a year is the number of days from selling goods and services on credit and the day it takes to receive cash.

It is calculated as average accounts receivable divided net sales multiply by the number of days in a year.

In the question, let's take the number of days in a year as 360days.

Average Accounts Receivable is

$10,000 + $5,000

$7,500.

Therefore, the number if days is now:

($7,500/$200,000) x 360days

=13.5 days