Question

The opening balance of Accounts Receivable for George Company was $25,000. Net sales (all on account) for the year amounted to $200,000. The Company doesn't offer any cash discount. During the year $180,000 was collected on accounts receivable. Compute accounts receivable turnover for the year.

Answer 1

Answer:

5.7 times

Explanation:

Computation of George Company accounts receivable turnover for the year.

First step

Net sales - Amount collected on Account receivable

$200,000-$180,000

=$20,000

Thus,

Opening Balance of Accounts Receivable

$25,000+$20,000

=$45,000

Second step is to calculate for Account Receivable Turnover

$200,000 ÷ [($25,000 + $45,000) ÷ 2]

$200,000÷($70,000÷2)

$200,000÷$35,000

= 5.7 times

Therefore the accounts receivable turnover for the year will be 5.7 times