Data from Keniston Corporation's most recent balance sheet and income statement appear below: $\begin{array}{ll}
&\text { This Year } & \text { Last Year } \
\text {Accounts receivable. }&\$ 128,000 & \$ 114,000 \
\text {Inventory. }&\$228,000 & \$ 193,000 \
\text {Sales on account. }&\$813,000 & \
\text {Cost of goods sold }&\$ 597,000 &
\end{array}$ The average collection period for this year is closest to:
A)39.1 days
B)45.1 days
C)54.3 days
D)57.5 days

Question

Quizplus · Accepted Answer

The average collection period is calculated as (Average Accounts Receivable / Sales on Account) * 365. The average accounts receivable is ($128,000 + $114,000) / 2 = $121,000. Thus, the average collection period is ($121,000 / $813,000) * 365 ≈ 54.3 days.

Data from Keniston Corporation's Most Recent Balance Sheet and Income