Question

The following data are available for the Hunting Balloon Company: Sales for the current year $ 1,500,000 Cost of goods sold for the current year 1,200,000 Accounts receivable, beginning of year 140,000 Accounts receivable, end of year 160,000 The accounts receivable turnover ratio for the current year is _______

Answer 1

Answer:

10 times

Explanation:

The computation of the accounts receivable turnover ratio is shown below:

Account receivable turnover ratio = Net credit sales ÷ Average accounts receivable  

where,

Net credit sales is $1,500,000

And, the Average accounts receivable  would be

= (Accounts receivable, beginning of year + Accounts receivable, end of year) ÷ 2

= ($140,000 + $160,000) ÷ 2

= $150,000

So, the accounts receivable turnover ratio  would be

= $1,500,000 ÷ $150,000

= 10 times