The following balance sheet information was provided by Western Company: $\begin{array}{lrr}
\text { Assets } & \text { Year 2 } &{\text { Year 1 }} \
\text { Cash } & \$ 4,000 & \$ 2,000 \
\text { Accounts receivable } & 15,000 & 12,000 \
\text { Inventory } & \$ 35,000 & \$ 38,000
\end{array}$ Assuming Year 2 net credit sales totaled $270,000, what was the company's average days to collect receivables? (Use 365 days in a year. Do not round your intermediate calculations.)
A) 18.25 days
B) 47.31 days
C) 16.22 days
D) 20.28 days

Question

Quizplus · Accepted Answer

Average days to collect receivables = (365 days * Average accounts receivable) / Net credit salesAverage accounts receivable = (Beginning accounts receivable + Ending accounts receivable) / 2= ($12,000 + $15,000) / 2= $13,500Average days to collect receivables = (365 days * $13,500) / $270,000= 18.25 days

The Following Balance Sheet Information Was Provided by Western Company