Thompson Wood Products has credit sales of $2,736,000 and accounts receivable of $699,200. Compute the value of the average collection period. (Use a 360-day year.)

The Average Collection period is 92 days.

Explanation:

Average collection period is the average number of days between the number of credit sales and the day when the cash is received. It means how many days it will take received cash from the credit sales on average.

Credit Sales =  $2,736,000

Account Receivable = $699,200

Average collection period = ( Account receivable / Credit sales ) x 360

Average collection period = ( $699,200 / $2,736,000 ) x 360

Average collection period = 92 days

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