Data from Dalpiaz Corporation's most recent balance sheet and income statement appear below: This YearLast YearAccounts receivable, net$104,000 $114,000 Inventory$157,000 $165,000 Sales on account$647,000    Cost of goods sold$438,000   ?Required:Compute the average collection period for this year:

What will be an ideal response?


Average collection period = 365 days ÷ Accounts receivable turnover*

= 365 days ÷ 5.94 = 61.4 days

*Accounts receivable turnover = Sales on account ÷ Average accounts receivable balance**

= $647,000 ÷ $109,000 = 5.94

**Average accounts receivable= ($104,000 + $114,000) ÷ 2 = $109,000

Business

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