Queen Co.’s balance in accounts receivable is $240,000. Annual credit sales are $2,880,000. Queen’s average collection period is
A) 12 days.
B) 30.4 days.
C) 2.5 days.
D) There is not enough information.
Darshita Changed status to publish August 12, 2020
Answer:
average collection period
=365 / Average receivable turnover ratio
Average receivable turnover ratio
= Net credit sales / Average account receivable
= 2,880,000 / 240,000
=12
average collection period
=365 / 12
= 30.4 days.
average collection period = 30.4 days.
Darshita Changed status to publish August 12, 2020
