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A firm has sales of $3 million, and 10 percent of the sales are for cash. The year-end accounts receivable balance is $285,000. What is the average collection period

Answer :

RITMEKSGO

Answer:

38 days

Explanation:

The first step is to calculate the average daily credit sales

= 3,000,000× 0.9/360

= 2,700,000/360

= 7500

Therefore the average collection period can be calculated as follows

= 285,000/7500

= 38

Hence the average collection period is 38 days

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