Answer: The average collection period of the receivables in terms of days was 73 days.
Explanation:
Given that,
Accounts Receivable at the beginning of the year = $390,000
Accounts Receivable at the end of the year = $410,000
Net credit sales during the year = $2,000,000
Average collection period of the receivables in terms of days:
Average accounts receivables = [tex]\frac{410000 + 390000}{2}[/tex]
= 4,00,000
Net credit sales = [tex]\frac{2000000}{400000}[/tex] = 5
∴ Accounts receivable days = [tex]\frac{365}{5}[/tex]
= 73 days
The average collection period of the receivables in terms of days was 73 days.
