Delta PDA Distributors has an investment in accounts receivable of $2,750,000. Daily credit sales are $118,280. Delta's cost of goods sold represent 75% of the sales price. What is the level of accounts receivable?
A) $2,750,00
B) $3,666,667
C) $2,062,500
D) $1,925,000

Question

Quizplus · Accepted Answer

The level of accounts receivable is calculated by dividing the investment in accounts receivable by the daily credit sales, which gives $2,750,000 / $118,280 = 23.25 days. To find the level of accounts receivable in terms of sales, multiply the daily credit sales by the number of days: $118,280 * 23.25 = $3,666,667.

Delta PDA Distributors Has an Investment in Accounts Receivable of $2,750,000