Question

Mr. Husker’s Tuxedos Corp. ended the year 2018 with an average collection period of 37 days. The firm’s credit sales for 2018 were $56.6 million. What is the year-end 2018 balance in accounts receivable for Mr. Husker’s Tuxedos?

Answer 1

Answer: Accounts receivables = 5737534.25

Explanation:

Average collection period measures the average number of days between the day inventory is sold on credit and the day customer settles the credit account.

average collection period = 37 days

credit sales = 56600000

Average collection period = (Accounts receivable/credit sales) x 365

37 = (Accounts receivables/56600000) x 365

365Accounts receivables =  56600000 x 37

Accounts receivables = 2094200000/365

Accounts receivables = 5737534.2466

Accounts receivables = 5737534.25