Answer (C) is correct . The average collection period equals 365?days divided by the receivables turnover (net credit sales ¡Â average accounts receivable). Turnover is 18.52 times {$6,205,000 sales ¡Â [($350,000 + $320,000) ¡Â 2]}. Hence, the average collection period is 19.71 days (365 ¡Â 18.52).
Answer (A) is incorrect because The number of 18.82 days is based on receivables of $320,000.
Answer (B) is incorrect because The number of 19.43 days is based on a 360-day year.
Answer (D) is incorrect because The number 20.59 days is based on receivables of $350,000.
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Volpone Company’s average number of days to collect accounts receivable for Year 2 is