Delta Distributors has accounts receivable of $2,750,000 and average daily credit sales of $118,280.The firm offers credit terms of 2/10,net 30.On average,what is the firm's accounts receivable period?
A)19.47 days
B)23.25 days
C)37.14 days
D)20.00 days
E)18.64 days

Question

Quizplus · Accepted Answer

First, we need to calculate the average daily credit sales:

Average daily credit sales = Annual credit sales / 365 days
Annual credit sales = Average daily credit sales x 365
Annual credit sales = $118,280 x 365 = $43,138,200

Now we can use this formula to calculate the accounts receivable period:

Accounts receivable period = (Accounts receivable / Average daily credit sales) x 365

Accounts receivable period = ($2,750,000 / $118,280) x 365
Accounts receivable period = 23.25 days

Therefore, the best choice is B, with an accounts receivable period of 23.25 days.

Delta Distributors Has Accounts Receivable of $2,750,000 and Average Daily