Oliveras Company had net credit sales during the year of $800,000 and cost of goods sold of $500,000. The balance in accounts receivable at the beginning of the year was $100,000, and the end of the year it was $150,000. What were the accounts receivable turnover and the average collection period in days?

Question

Dereon

Business

8 September, 17:31

Oliveras Company had net credit sales during the year of $800,000 and cost of goods sold of $500,000. The balance in accounts receivable at the beginning of the year was $100,000, and the end of the year it was $150,000. What were the accounts receivable turnover and the average collection period in days?

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Answers (1)

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Lexie Sharp · Answer 1

6.4 & 57 days

Explanation:

Average accounts receivable turnover ratio = net credit sales/average accounts receivable

For Oliveras company:

Net credit sales" $ 800,000.00

Average account accounts receivable = opening inventory + closing inventory / 2

= ($100,000 + $150,000) 2=$ 125,000

Average receivable turnover = $800,000/$125,000

=6.4

Average collection period = 365 / Average receivable turnover

=365 / 6.4

=57.03

57 days