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If credit sales for the year is Rs 5 40 000...

This question belongs to Commerce Costing
Costing
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If credit sales for the year is Rs 5,40,000 and Debtors at the end of year is Rs 90,000 the Average Collection Period will be

Answer & Solution
Correct Answer: Option B
Rs. 540000 divided by Rs. 90,000 = 6 times per year. Since there were 365 days during the recent year, the average collection period is 365 days divided by the turnover ratio of 6 = 60.8333 days or 61 days.
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