Problembrenda smith inc had a gross profit margin gross, Ask an Expert

Accounting

Problem:

Brenda Smith, Inc. had a gross profit margin (gross profits ÷ sales) of 25% and sales of $9.75 million last year. Seventy-five percent of the firm's sales are on credit and the remainder are cash sales. Smith's current assets equal $1,550,000, its current liabilities equal $300,000, and it has $150,000 in cash plus marketable securities.

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Question: If Smith's accounts receivable are $562,500, what is its average collection period?

Note: Please provide reasons to support your answer.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91171389

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