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4 March, 02:55

Rhodes Company reports the following information for the Year 1 fiscal year: Sales on account$650,000 Accounts receivable$70,000 Allowance for doubtful accounts$4,000 Determine the average number of days it takes Rhodes to collect its accounts receivable. (Round intermediate calculations to 2 decimal places.)

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  1. 4 March, 03:25
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    37 days

    Explanation:

    Given:

    Credit sales during the year = $650,000

    Account receivable = $70,000

    Allowance for doubtful accounts = $4,000

    Average collection days = ?

    Computation of Debtor turn over:

    Debtor turn over = Credit sales during the year / (Account receivable - Allowance for doubtful accounts)

    Debtor turn over = $650,000 / ($70,000 - $4,000)

    Debtor turn over = $650,000 / ($66,000)

    Debtor turn over = 9.84848485

    Computation of Average collection days:

    Average collection days = 365 / Debtor turn over

    Average collection days = 365 / 9.84848485

    Average collection days = 37.06 = 37 days (Approx)
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