Question

The following information is available for Market, Inc. and Supply, Inc. at December 31: Accounts Market, Inc. Supply, Inc. Accounts receivable $ 56,200 $ 75,400 Allowance for doubtful accounts 2,248 2,256 Sales revenue 606,960 867,100 Required a. What is the accounts receivable turnover for each of the companies

Answer 1

Answer and Explanation:

The computation of the account receivable turnover for both the companies is shown below:

For Market inc

= Net sales ÷ Account receivable

= ($606,960) ÷ ($56,200 - $2,248)

= ($606,960) ÷ ($53,952)

= 11.25 times

For Supply Inc

= Net sales ÷ Account receivable

= ($867,100) ÷ ($75,400 - $2,256)

= ($867,100) ÷ ($73,144)

= 11.85 times

We simply applied the above formula so that the correct value could come

And, the same is to be considered