Question

"Net credit sales are $800,000, average net receivables total $150,000, average inventory totals $200,000, and the allowance for doubtful accounts totals $8,000. How much is the average collection period?"

Answer 1

Answer:

68.44 days

Explanation:

The net credit sales are $800,000

Average net receivables total is $150,000

Average inventory turnover is $200,000

Doubtful account Total is $8,000

Therefore the average collection period can be calculated as follows

= $800,000/$150,000

= 5.3333

= 365/5.3333

= 68.44 days