ABC company's records included the following, assume 365 days in a year:Accounts Receivable, 12/31/20$ 860,000Accounts Receivable, 12/31/19780,000Merchandise Inventory, 12/31/20900,000Merchandise Inventory, 12/31/19Net Sales during 2020Cost of Sales during 2020800,0008,364,0005,950,000What is the average collection period, in days, for Solomon's accounts receivableO 35.8 daysO 36.3 daysO 34.1 days37.5 days

Average collection period = 365 * ((Accounts receivable, Opening + Accounts receivable,…

Answered: average collection period_

Business

Accounting

average collection period_

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.

Question

ABC company's records included the following, assume 365 days in a year:
Accounts Receivable, 12/31/20
$ 860,000
Accounts Receivable, 12/31/19
780,000
Merchandise Inventory, 12/31/20
900,000
Merchandise Inventory, 12/31/19
Net Sales during 2020
Cost of Sales during 2020
800,000
8,364,000
5,950,000
What is the average collection period, in days, for Solomon's accounts receivable
O 35.8 days
O 36.3 days
O 34.1 days
37.5 days

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