Question

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Blossom Company had accounts receivable of $200,000 on January 1, 2020. The only transactions that affected...

Blossom Company had accounts receivable of $200,000 on January 1, 2020. The only transactions that affected accounts receivable during 2020 were net credit sales of $1,125,000, cash collections of $1,025,000, and accounts written off of $50,000.

Compute the ending balance of accounts receivable.

Ending balance of accounts receivable

$

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Compute the accounts receivable turnover for 2020. (Round answer to 0 decimal places, e.g. 25.)

Accounts receivable turnover

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Compute the average collection period in days. (Round answer to 1 decimal place, e.g. 2.5. Use 365 days for calculations.)

Average collection period

days

Expert Solution

Ending balance of Accounts Receivable

= Beginning accounts receivable + Credit sales - Cash collections - Write offs

= 200,000 + 1,125,000 - 1,025,000 - 50,000

= 250,000

Accounts Receivable Turnover = Credit sales/Average accounts receivables

= 1,125,000/[(200,000+250,000)/2]

= 1,125,000/225,000

= 5

Average collection period = 365/Accounts Receivable Turnover

= 365/5

= 73 days

ekkarill92 answered 2 years ago

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