Question

Parker Hardware Store had net credit sales of $8,000,000 and cost of goods sold of $5,000,000 for the year. The Accounts Receivable balances at the beginning and end of the year were $600,000 and $700,000, respectively. The receivables turnover was:______.
a. 7.7 times.
b. 4.6 times.
c. 11.4 times.
d. 12.3 times.

Answer 1

Answer: d. 12.3 times

Explanation:

Receivables turnover = Net credit sales / Average accounts receivables

Average account receivables = (600,000 + 700,000) / 2

= $650,000

Receivables turnover = 8,000,000 / 650,000

= 12.3 times