Question

The financial statements of the Otter Company report net sales of $800,000 and accounts receivable of $40,000 and $20,000 at the beginning of the year and end of year, respectively. What is the accounts receivable turnover for the Otter Company?

Answer 1

Answer:

Average account receivable turnover will be 26.66

Explanation:

We have given net sales of the company = $800000

Account receivable at the beginning of the year = $40000

And account receivable at the ending of the year = $20000

So average account receivable $=\frac{40000+20000}{2}= 30000$

We have to find the account receivable turnover

Account receivable turnover is give by

Account receivable turnover $=\frac{total\ net\ sales}{average\ net\ account\ receivable}=\frac{800000}{30000}=26.66$

So average account receivable turnover will be 26.66