Your company had net sales of $100,000 over the past year. One quarter of the sales were credit sales. During that time, average receivables were $5,000. The accounts receivable balance at the end of the year was $5,000. What was the average collection period? What is the average age of receivables (same answer!)? (Assume a 360-day year) 18 days O 27 days O 36 days O 72 days
Your company had net sales of $100,000 over the past year. One quarter of the sales were credit sales. During that time, average receivables were $5,000. The accounts receivable balance at the end of the year was $5,000. What was the average collection period? What is the average age of receivables (same answer!)? (Assume a 360-day year) 18 days O 27 days O 36 days O 72 days
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Transcribed Image Text:Your company had net sales of $100,000 over the past year. One quarter of the sales were credit
sales. During that time, average receivables were $5,000. The accounts receivable balance at the
end of the year was $5,000. What was the average collection period? What is the average age of
receivables (same answer!)? (Assume a 360-day year)
O 18 days
O 27 days
O 36 days
O 72 days
O 60 days
Expert Solution
Inputs
Net Sales = 100,000
One quarter were credit sales
Credit Sales = Net Sales / 4 = 100,000 / 4 = 25,000
Average Accounts Receivable = 5,000
360 day year
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