Question

"Swiss Clothing Store had a balance in the Accounts Receivable account of $920,000 at the beginning of the year and a balance of $980,000 at the end of the year. Net credit sales during the year amounted to $6,650,000. The average collection period of the receivables in terms of days was:"

Answer 1

Answer:

Receivable days are 52 days.

Explanation:

Receivable days can be found from the following formula:

Receivables days = Receivables / Credit Sales * 365

The credit sales here is $6,650,000 during the year and the average receivables days is $950,000 [(950,000 + 980,000)/2] during the year. By putting the values we have:

Receivables days = $950,000 / $6,650,000  * 365 = 52 days

So the average receivable collection days were 52 days during the year.