Question

Asset Management Ratios Mr. Husker’s Tuxedos Corp. ended the year 2015 with an average collection period of 32 days. The firm’s total sales for 2015 were $56.1 million. What is the year-end 2015 balance in accounts receivable for Mr. Husker’s Tuxedos?

Answer 1

Answer:

$4,918,356

Explanation:

We know that

Average collection period in days = (Account receivable ÷ credit sales) × total number of days in a year

32 days = (Accounts receivable ÷ $56.1 million) × 365 days

So, the accounts receivable would be

= (32 days × $56,100,000) ÷ 365 days

= $4,918,356

Simply we apply the average collection period formula so that the accurate amount can come.