Answer:
47.40 days
Explanation:
The average collection period of the Missoula Inc. for the year ended 2021 shall be determined through following mentioned formula:
Average collection period=365/Receivable turnover ratio
First we will calculate the Receivable turnover ratio which shall be calculated as follows:
Receivable turnover ratio=Credit sales in 2021/Average receivables in 2021
Credit sales in 2021= $581,350
Average receivable in 2021=$65,000+$86,000/2=$75,500
Receivable turnover ratio=$581,350/$75,500
=7.7
Now we will calculate the average collection period using above calculations as follows:
Average collection period=365/7.7=47.40 days