Question

the financial statements of the novak corp. report net sales of $300000 and accounts receivable of $55200 and $27600 at the beginning of the year and the end of the year, respectively. What is the average collection period for accounts receivable in days?

Answer 1

Answer:

50.34 days

Step-by-step explanation:

The computation of the average collection period is shown below:

But before that the account receivable turnover ratio would be determined

Account receivable turnover ratio is

= ($300,000) ÷ ($55,200 + $27,600) ÷ 2

= $300,000 ÷ $41,400

= 7.25 times

Now the average collection period is

= 365 days ÷ 7.25

= 50.34 days

Here we assume that there are 365 days in a year