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Homework answers / question archive / Given the following information, what is the Accounts Receivable Period? Beginning inventory = $50,000 Ending inventory = $45,000 Beginning Accounts Receivable = $60,000 Ending Accounts Receivable = $66,000 Beginning Accounts Payable = $70,000 Ending Accounts Payable = $84,000 Sales = $1,000,000 % credit sales = 70% Cost of goods sold = $450,000
Given the following information, what is the Accounts Receivable Period?
Beginning inventory = $50,000
Ending inventory = $45,000
Beginning Accounts Receivable = $60,000
Ending Accounts Receivable = $66,000
Beginning Accounts Payable = $70,000
Ending Accounts Payable = $84,000
Sales = $1,000,000
% credit sales = 70%
Cost of goods sold = $450,000
Computation of the accounts receivable period:-
Average accounts receivable = (Beginning accounts receivable + Ending accounts receivable) / 2
= ($60,000 + $66,000) / 2
= $126,000 / 2
= $63,000
Net credit sales = $1,000,000*70%
= $700,000
Accounts receivable period = (Average accounts receivable / Net credit sales) * 365
= ($63,000 / $700,000) * 365
= 0.09 * 365
= 32.85 days
