Question

The financial statements of the Sunland Company reports net sales of $828000 and accounts receivable of $79200 and $43200 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:

See below

Explanation:

Given the above information, the average collection period in days is computed as

= Average balance of account receivables / Net credit sales × 365

Average balance of account receivables = ($79,200 + $43,200) / 2

= $61,200

Net credit sales = $828,000

= $61,200 / $828,000 × 365

= 26.97 days

= 27 days

Hence the average collection period in days is 27 days