Question

Leary Corporation had net credit sales during the year of $1,200,000 and cost of goods sold of $720,000. The balance in accounts receivable at the beginning of the year was $120,000 and at the end of the year was $180,000. What was the accounts receivable turnover?

Answer 1

Answer:

Accounts Receivable Turnover  = 8.0 Times

Explanation:

given data

net credit sales = $1,200,000

cost of goods sold = $720,000

accounts receivable beginning = $120,000

accounts receivable ending = $180,000

to find out

What was the accounts receivable turnover

solution

we get here accounts Receivable Turnover that is express as

Accounts Receivable Turnover = Net Credit Sales ÷ Average Accounts Receivable      .................1

here Average Accounts Receivable is = Opening Accounts Receivable + Closing Accounts Receivable     .................2

Average Accounts Receivable = $\frac{ 1,20,000+ 1,80,000}{2}$

Average Accounts Receivable = $1,50,000

so put value in equation 1

Accounts Receivable Turnover  = $\frac{12,00,000}{1,50,000}$

Accounts Receivable Turnover  = 8.0 Times