Box Company reported the following data at the end of 20X2: $$\begin{array} { | l | r | }
\hline \text { Sales revenue (75\% on credit) } & \$ 300,000 \
\hline \text { Expenses } & 60,000 \
\hline \begin{array} { l }
\text { Trade receivables, net at December 31, 19B (a decrease of } \
\$ 4,000 \text { during 19B) }
\end{array} & 8,000 \
\hline \text { Total assets } & 200,000 \
\hline \text { Shareholders' equity } & 150,000 \
\hline \text { Assume a 365-day year } & \
\hline
\end{array}$$ What was the average number of days to collect receivables during 20X2?
A) 14.3
B) 16.2
C) 21.9
D) 36.5

Question

Box Company reported the following data at the end of 20X2: $$\begin{array} { | l | r | } 
\hline \text { Sales revenue (75\% on credit) } & \$ 300,000 \
\hline \text { Expenses } & 60,000 \
\hline \begin{array} { l } 
\text { Trade receivables, net at December 31, 19B (a decrease of } \
\$ 4,000 \text { during 19B) }
\end{array} & 8,000 \
\hline \text { Total assets } & 200,000 \
\hline \text { Shareholders' equity } & 150,000 \
\hline \text { Assume a 365-day year } & \
\hline
\end{array}$$ What was the average number of days to collect receivables during 20X2?
A) 14.3
B) 16.2
C) 21.9
D) 36.5

Quizplus · Accepted Answer

The average collection period is calculated as (Average Receivables / Credit Sales) * 365. Average Receivables = (8,000 + 12,000) / 2 = 10,000. Credit Sales = 75% of 300,000 = 225,000. Thus, (10,000 / 225,000) * 365 = 16.2 days.

Box Company Reported the Following Data at the End of 20X2