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Mervyn’s Fine Fashions has an average collection period of 50 days. The accounts receivable balance is $95,000. What is the value of its credit sales?

Short Answer

Expert verified

The value of credit sales is $684,000.

Step by step solution

01

Information provided in the question

Average collection period = 50 days

Accounts receivables = $95,000

02

Calculation of average collection period

The credit sales is $684,000.

Averagecollectionperiod=Accountsreceivable(Creditsales360)(Creditsales360)=95,00050daysCreditsalesperday=$1,900

Annualcreditsales=Creditsalesperday×360=$1,900×360=$684,000

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