At year-end, schultz has cash of $ 11 comma 600, current accounts receivable of $ 48 comma 900, merchandise inventory of $ 37 comma 900, and prepaid expenses totaling $ 5 comma 100. liabilities of $ 55 comma 900 must be paid next year. assume accounts receivable had a beginning balance of $ 67 comma 400 and net credit sales for the current year totaled $ 807 comma 800. how many days did it take schultz to collect its average level of receivables? (assume 365 days/year. round any interim calculations to two decimal places. round the number of days to the nearest whole number.) a. 49 b. 35 c. 29 d. 26

D. 26 days

Explanation:

For computing the Average collection period, first, we have to find out the  Accounts receivable turnover ratio  which is shown below

= Credit sales ÷ average accounts receivable

where,  

Average accounts receivable = (Opening balance of Accounts receivable + ending balance of Accounts receivable) ÷ 2

= ,($67,400 + $48,900) ÷ 2

= $58,150

And, the net credit sale is $807,800  

Now put these values to the above formula  

So, the answer would be equal to  

= $807,800 ÷ $58,150

= 13.89 times

Now  Average collection period in days = Total number of days in a year ÷ accounts receivable turnover ratio

= 365 days ÷ 13.89 times

= 26.27 days

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