The following balance sheet information was provided by Western Company: $\begin{array}{|l|r|r|}
\hline \text { Assets } & 2014 & 2013 \
\hline \text { Cash } & \$ 4,000 & \$ 2,000 \
\hline \text { Accounts receivable } & 15,000 & 12,000 \
\hline \text { Inventory } & \$ 35,000 & \$ 38,000 \
\hline
\end{array}$ Assuming 2014 net credit sales totaled $270,000, what was the company's average days to collect receivables? (Use 365 days in a year. Do not round your 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: $\begin{array}{|l|r|r|}
\hline \text { Assets } &  2014  & 2013 \
\hline \text { Cash } & \$  4,000 & \$  2,000 \
\hline \text { Accounts receivable } &  15,000 &  12,000 \
\hline \text { Inventory } & \$  35,000 & \$  38,000 \
\hline
\end{array}$ Assuming 2014 net credit sales totaled $270,000, what was the company's average days to collect receivables? (Use 365 days in a year. Do not round your intermediate calculations.)
A) 18.25 days
B) 47.31 days
C) 16.22 days
D) 20.28 days

Quizplus · Accepted Answer

Average days to collect receivables = (365 days * Average accounts receivable) / Net credit salesAverage accounts receivable = ($15,000 + $12,000) / 2 = $13,500Average days to collect receivables = (365 days * $13,500) / $270,000 = 18.25 days

The Following Balance Sheet Information Was Provided by Western Company