Garham Company had $360,000 in sales on account last year. The beginning accounts receivable balance was...

Garham Company had $360,000 in sales on account last year. The beginning accounts receivable balance was $20,000 and the ending accounts receivable balance was $36,000. The company's average collection period (age of receivables) was closest to:

		20.28 days.
		28.39 days.
		36.50 days.
		56.78 days.

Expert Solution


Average Collection Period = Average Account Receivable / (Credit Sales / 365)

Average Account receivable
Opening Account receivable =	$ 20,000
Add: Closing Account receivable	$ 36,000
Average Account receivable (A)	$ 28,000

Crdit Sales / 365 = $ 360,000 / 365 Days = (B)	$ 986.30

Average Collection Period =($ 28,000 / $ 986.30 ) A/B =	28.39


Answer = Option 2 = 28.39 Days

ekkarill92 answered 1 year ago

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