Fishers Furniture Store sells 900000 worth of furniture to c

Fisher’s Furniture Store sells $900,000 worth of furniture to customers on credit each month. The Accounts Receivable balance in the accounting books averages $2 million. On average, how long are customers taking to pay their bills?

Solution

Solution :

Creditors Period (Time customers take to make payment) = Account Receivables / Sales = 2,000,000 / 900,000 = 2.22 month or 66.67 days

So, customers are taking around 67 days to pay their bills.