Question

credit sales = $8,000. Beginning and ending accounts receivable = $1,800 and $1,400, respectively. What are...

credit sales = $8,000. Beginning and ending accounts receivable = $1,800 and $1,400, respectively. What are collections and the age of accounts receivable, assuming a 360-day year?

A. $7,600 and 36 days.

B. $7,600 and 72 days.

C. $8,000 and 10 days.

D. $8,400 and 36 days.

E. $8,400 and 72 days.

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Homework Answers

Answer #1

Answer: Option E. $ 8,400 and 72 days

Calculation of collection as follows:

Collection = Total receivables - Ending account receivable

= $9,800 - $1,400

= $8,400

Total receivables = Begining account receivable + credit sales

= $1,800 + $8,000

= $9,800

Calculation of age of accounts receivable as follows:

Age of accounts receivable = (Average Accounts receivable / Credit sales ) * 360 days

= ($1,600 / $8,000) * 360

= 72 days

Average accounts receivable = ( Beginning accounts receivable + Ending accounts receivable ) / 2

= ( $1800 + $1,400 ) / 2

= $ 1,600

Thus, Collection and age of accounts receivable is $8,400 and 72 days ( answer option E)

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