Question

The following information is from the annual financial statements of Raheem Company. 2017 2016 2015 Net sales $ 445,000 $ 376,000 $ 421,000 Accounts receivable, net (year-end) 43,000 40,800 37,500 Compute its accounts receivable turnover for 2016 and 2017.

Answer 1

Answer:

9.60; 10.62

Explanation:

In 2016:

Average accounts receivables:

= (Beginning accounts receivable + Ending accounts receivable) ÷ 2

= (37,500 + 40,800) ÷ 2

= 39,150

Accounts receivable turnover = Net sales ÷ Average accounts receivables

                                                 = $376,000 ÷ 39,150

                                                 = 9.60

In 2017:

Average accounts receivables:

= (Beginning accounts receivable + Ending accounts receivable) ÷ 2

= (40,800 + 43,000) ÷ 2

= 41,900

Accounts receivable turnover = Net sales ÷ Average accounts receivables

                                                 = $445,000 ÷ 41,900

                                                 = 10.62