Graber Company had $130,000 in sales on account last year. The beginning accounts receivable balance was $18,000 and the ending accounts receivable balance was $12,000. The company's average collection period was closest to: Select one: a. 33.69 days b. 42.12 days c. 84.23 days d. 50.54 days

Question

Business

Tommy Bridges

8 August, 08:24

Graber Company had $130,000 in sales on account last year. The beginning accounts receivable balance was $18,000 and the ending accounts receivable balance was $12,000. The company's average collection period was closest to: Select one: a. 33.69 days b. 42.12 days c. 84.23 days d. 50.54 days

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Sofia · Answer 1

b. 42.12 days

Explanation:

Calculation for Graber company's average collection period will be:

Using this formula

Average collection period = Sales/[ (Beginning accounts receivable + Ending accounts receivable) / 2]

Let plug in the formula

130,000/[ (18,000 + 12,000) / 2]

=130,000 / (30,000/2)

130,000/15,000

= 8.66days

Hence,

365/8.666666

=42.12 days

Therefore Graber company's average collection period will be 42.12 days