A firm ended the year with an average collection period of 20 days. The firm's credit sales were $50 million. What is the firm's year-end balance in accounts receivable?
A) $1.46 million
B) $2.50 million
C) $2.74 million
D) $4.00 million

Question

Quizplus · Accepted Answer

The year-end balance in accounts receivable can be calculated using the formula: (Average Collection Period / 365 days) * Credit Sales. Plugging in the given values: (20 / 365) * $50,000,000 = $2,739,726.03, which rounds to $2.74 million.

A Firm Ended the Year with an Average Collection Period