The following balance sheet information was provided by Western Company: Assuming Year 2 net credit sales totaled $270,000, what were the company's average days to collect receivables? (Use 365 days in a year. Do not round intermediate calculations.)
A) 18.25 days
B) 47.31 days
C) 16.22 days
D) 20.28 days

Question

The following balance sheet information was provided by Western Company:  Assuming Year 2 net credit sales totaled $270,000, what were the company's average days to collect receivables? (Use 365 days in a year. Do not round intermediate calculations.)
A) 18.25 days 
B) 47.31 days 
C) 16.22 days 
D) 20.28 days

Quizplus · Accepted Answer

Accounts receivable turnover = Net credit sales ÷ [(Beginning accounts receivable + ending accounts receivable) ÷ 2]
Accounts receivable turnover = $270,000 ÷ [($12,000 + $15,000) ÷ 2] = $270,000 ÷ $13,500 = 20 times
Average days to collect receivables = 365 days ÷ 20 = 18.25 days

The Following Balance Sheet Information Was Provided by Western Company