Darla’s Cosmetics has annual credit sales of $1,476,000 and an average collection period of 40 days...
Darla’s Cosmetics has annual credit sales of $1,476,000 and an
average collection period of 40 days in
2008.
What is the company’s average accounts receivable balance?
(Use a 360-day year.)
Homework Answers
Answer:
Average Days in Collection = 360days / Accounts Receivable
Turnover
40 = 360 / Accounts Receivable Turnover
Accounts Receivable Turnover = 360 / 40
Accounts Receivable Turnover = 9 times
Accounts Receivable Turnover = Net Credit Sales / Average
Accounts Receivable
9 = $1,476,000 / Average Accounts Receivable
Average Accounts Receivable = $1,476,000 / 9
Average Account Receivable = $164,000
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