A. The average collection period is calculated as average accounts receivable divided by the average daily sales. Average receivables were $37,500 ($45,000 + $30,000 divided by 2) and the average sales were $833.33 ($300,000 divided by 360). Dividing $37,500 by $833.33 gives us 45 days of sales in receivables. This means that it takes an average of 45 days to collect receivables.
B. This answer is incorrect. See the correct answer for a complete explanation.
C. This answer is incorrect. See the correct answer for a complete explanation.
D. This answer is incorrect. See the correct answer for a complete explanation.
