Granger Company had $180,000 in sales on account last year.The beginning accounts receivablebalance was $10,000,and the ending accounts receivable balance was $18,000.The company's average collection period (age of receivables)was closest to which of the following? Do not round intermediate calculations.
A) 20.28 days.
B) 28.39 days.
C) 36.50 days.
D) 56.78 days.

Question

Quizplus · Accepted Answer

The average collection period is calculated as (Average Accounts Receivable / Sales on Account) * 365 days. Average Accounts Receivable is (Beginning Accounts Receivable + Ending Accounts Receivable) / 2 = ($10,000 + $18,000) / 2 = $14,000. Thus, the average collection period is ($14,000 / $180,000) * 365 = 28.39 days.

Granger Company Had $180,000 in Sales on Account Last Year