Financial statements for Marcial Company appear below:

-Marcial Company's average collectionperiod (age of receivables)for Year 2 was closest to which of the following? Do not round intermediate calculations.
A) 24.6 days.
B) 30.2 days.
C) 35.2 days.
D) 43.2 days.

Question

Financial statements for Marcial Company appear below:

-Marcial Company's average collectionperiod (age of receivables)for Year 2 was closest to which of the following? Do not round intermediate calculations.
A) 24.6 days. 
B) 30.2 days. 
C) 35.2 days. 
D) 43.2 days.

Quizplus · Accepted Answer

The average collection period is calculated by dividing the average accounts receivable by the annual credit sales and multiplying by 365 days. For Year 2, the average accounts receivable is $1,000,000, the annual credit sales are $12,000,000, and the average collection period is 30.2 days.

Financial Statements for Marcial Company Appear Below