Question

Given the following information, compute accounts receivable turnover. Gross sales $150,000 Accounts receivable, beginning of year $18,000 Sales 135,000 Accounts receivable, end of year

Answer 1

Answer:

6.75

Explanation:

Given that,

Gross sales = $150,000

Accounts receivable, beginning of year = $18,000

Sales = $135,000

Accounts receivable, end of year = $22,000

Average accounts receivables:

= (Beginning AR + Ending AR) ÷ 2

= ($18,000 + $22,000) ÷ 2

= $40,000 ÷ 2

= $20,000

Accounts receivable turnover:

= Sales ÷ Average accounts receivables

= $135,000 ÷ $20,000

= 6.75

Note: Accounts receivable, end of year is missing from the question. It is amounted to $22,000.