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The financial statements of the Splish Brothers Inc. reports net sales of $612000 and accounts receivable...

The financial statements of the Splish Brothers Inc. reports net sales of $612000 and accounts receivable of $78000 and $46800 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days?

25 days

74 days

49 days

37.2 days
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Answer #1
Ans. Option   4th 37.2 days
*First of all, we need to calculate the average receivables.
*Average receivable = (Beginning receivables + Ending receivables) / 2
($78,000 + $46,800) / 2
$62,400
*Now we can calulate the number of days in average collection period.
Number of days sales in receivable = No. of days in year / Net sales * Average receivables
365 / $612,000 * $62,400
37.2 days
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