Question

In: Accounting

Accounts Payable 420 Accounts Receivable 3,200 Capital Stock 240 Cash 100 Cost of Goods Sold 600...

Accounts Payable

420

Accounts Receivable

3,200

Capital Stock

240

Cash

100

Cost of Goods Sold

600

Inventory

380

Long-term Debt

4,640

Net Income

280

Property, Plant, and Equipment (net)

1,400

Retained Earnings

(220)

Sales

3,000

Note: The retained earnings amount reported is as of the END of the year (after the closing entries have been made).

Compute AVERAGE COLLECTION PERIOD (also called NUMBER OF DAYS’ SALES IN ACCOUNTS RECEIVABLE). Note: If you need to compute the average balance for any account, assume that the beginning-of-year balance is the same as the end-of-year balance reported above.

Group of answer choices

342.2 days

194.7 days

31.9 days

93.8 days

389.3 days

Solutions

Expert Solution

NUMBER OF DAYS’ SALES IN ACCOUNTS RECEIVABLE = Average accounts Receivable / Average daily sales
                                     =3200/8.22
               =389.3 Days
Average accounts receivable = (Opening Receivable + Closing receivable )/2
                             =(3200+3200)/2
                             =3200
Average Daily sales = Annual sales / No. of days in a year
                                            =3000/365
8.22

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