On December 31 of Year 1, a company reports accounts receivable of $110,000. During Year 2,...
On December 31 of Year 1, a company reports accounts receivable
of $110,000. During Year 2, the company has net credit sales of $1
million. On December 31 of Year 2, the company reports accounts
receivable of $140,000.
What is this company’s accounts receivable turnover ratio for Year
2?
A. 7.14
B. 8.00
C. 8.33
D. 9.09
Homework Answers
| Accounts receivable turnover = Net sales/Average receivables | |
| Average receivables = (110000+140000)/2 = | 125000 |
| Accounts receivable turnover = 1000000/125000 = | 8 |
| Answer: Option [b] | |
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