Answer: Average collection period = 36.69 Days
Explanation:
Given that,
Beginning accounts receivable balance = $14,000
Last year sales = $184,000
Ending accounts receivable balance = $23,000
Therefore,
Average accounts receivable:
= [tex]\frac{Accounts\ receivables\ in\ beginning + Accounts\ receivables\ in\ Ending}{2}[/tex]
= [tex]\frac{14000 + 23,000}{2}[/tex]
= $18,500
Here we are assuming 365 days in a year.
Average collection period = [tex]\frac{365\timesAverage\ accounts\ receivable}{Net\ sales}[/tex]
= [tex]\frac{365\times18,500}{184,000}[/tex]
= 36.69
∴ Average collection period = 36.69 Days
