A retailer has a collection period of 37 days.Its net sales equal $1,000,000.Its accounts receivable equals ________.
A) $27,027
B) $36,000
C) $101,370
D) The answer cannot be determined from the information provided.

Question

Quizplus · Accepted Answer

To calculate the accounts receivable, we use the formula: 
Average accounts receivable = (Net credit sales / Average accounts receivable turnover)
37 days = (365 days / Accounts receivable turnover)
Accounts receivable turnover = 365/37 = 9.86

Using this turnover ratio, we can calculate average accounts receivable:
Average accounts receivable = ($1,000,000 / 9.86) = $101,370.

Therefore, the answer is C.

A Retailer Has a Collection Period of 37 Days