Walker Clothing Store had a balance in the Accounts Receivable account of $390,000 at the beginning of the year and a balance of $410,000 at the end of the year. Net credit sales during the year amounted to $2,000,000. The average collection period of the receivables in terms of days wasa.)73 days. b.)30 days.
c.)365 days.
d.)146 days.

The amount owed to a company for goods or services provided or utilized but not yet paid for by consumers is known as accounts receivable. On the balance sheet, accounts receivable are listed as a current asset.

Correct option is A.

The computation of average collection period of the receivables is shown below:-

Beginning Accounts Receivable account = $390,000

Ending Balance of $410,000

Net credit sales = $2,000,000

The average collection period of the receivables in terms of days

= $410,000 + $390,000

= $800,000 ÷ 2

= $400,000

Net credit sales =  $2,000,000 ÷ $400,000= $5

Average collection period of the receivables in terms of days = Number of days in a year ÷ Net credit sales

= 365 days ÷ $5

= 73 days

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a. 73 days

Explanation:

The computation of average collection period of the receivables is shown below:-

Beginning Accounts Receivable account = $390,000

Ending Balance of $410,000

Net credit sales = $2,000,000

The average collection period of the receivables in terms of days

= $410,000 + $390,000

= $800,000 ÷ 2

= $400,000

Net credit sales = = $2,000,000 ÷ $400,000

= $5

Average collection period of the receivables in terms of days = Number of days in a year ÷ Net credit sales

= 365 days ÷ $5

= 73 days

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