Question

Edward Corporation had net credit sales during the year of $750,000 and cost of goods sold of $500,000. The net accounts receivables at the beginning of the year was $75,000 and at the end of the year was $110,000. The balance of total assets at the beginning of the year was $1,200,000 and at the end of the year was $1,500,000. How much is the accounts receivables turnover?

Answer 1

Answer:

8.108 times

Explanation:

Given:

Net credit sales = $750,000

Beginning accounts receivable = $75,000

Ending accounts receivable = $110,000

Average accounts receivables = $\frac{Beginning\ balance + closing\ balance}{2}$

= $\frac{75,000,+,110,000}{2}$

=$92,500

Accounts receivable turnover ratio = Credit sales ÷ Average receivables

                                                            = 750,000 ÷ 92,500

                                                            = 8.108 times