If the net sales of the year is Rs. 2,50,000 and the debtors is Rs. 50,000, then the average collection period will be
A. 45 day
B. 54 day
C. 73 day
D. 37 day
Answer: Option C
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Average Collection Period = Sundry Debtors/ Net Sales×No. Of Days in A Year
Average Collection Period= 50,000/250,000×365
Average Collection Period= 73 Days