Question

Given the following information, compute accounts receivable turnover: Gross sales $150,000 Accounts receivable, beginning of year $18,000 Sales 135,000 Accounts receivable, end of year 22,000 a.6.82 b.6.13 c.7.50 d.6.75

Answer 1

Answer:

Option D i.e., 6.75

Explanation:

$Formula\:of\:receivable\:turnover\:: \frac{sales}{Average\:of\:accounts\:}$

Given:

sales: 135,000

Opening Account: 18,000

Closing Account: 22,000

$Average\:of\:Account: \frac{Begining\:account+\:Closing\:Account}{2}$

                                $=\frac{18,000\:+\:22,000}{2}$

                                $=20,000$

Finally, implement the value of average account and net sale in 1st formula.

$Ratio\:of\:Receivable\:turnover= \frac{135,000}{20,000}$

                                              $=6.75\:i.e.,\:option\:D$