CFA Practice Question
Net credit sales total $355,000. The beginning accounts receivable balance was $15,000 and the ending accounts receivable balance is currently $21,000. Assuming a 365-day year, what is the average number of days required to collect accounts receivable?
A. 17.55
B. 18.51
C. 19.72
Explanation: The average number of days required to collect accounts receivable is determined by dividing 365 (days) by the turnover rate. The turnover rate is $355,000/$18,000 = 19.72. When 365 days is divided by 19.72, the average number of days for collections (365 days/19.72) equals 18.51 days.
User Contributed Comments 3
| User | Comment |
|---|---|
| Sundaresan | Where is 18,000 in the Question? |
| britpoprock | 18,000 is the average accounts receivable. |
| PSVC | 15000 + 21000 = 36000 36000 / 2 = 18000 = average accounts receivable |