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If cash sales is Rs 40 000 credit sales Rs 80...

This question belongs to Commerce Accounting
Accounting
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If cash sales is Rs. 40,000; credit sales Rs. 80,000 and the amount of debtors Rs. 20,000, the average collection period will be (consider 360 days in a year):

Answer & Solution
Correct Answer: Option C
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Abdul Muqeet
Abdul Muqeet 3 years ago
We just take credit sale on finding the Average collection period (ACP).
So, the formula of ACP is = Account Receivable OR Debtors divided by Sales / 360
= 20,000 divided by 80,000 / 360
= 20,000 / 222.22222
= 90-days.
So, the Answer C is right.
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