Final answer:
The accounts receivable turnover for Chiro-Solutions Company for 20Y2 is 9.1, and for 20Y1, it is 10.2. The turnover ratio is calculated by dividing the net credit sales by the average accounts receivable for the year.
Step-by-step explanation:
The subject of this question is calculating the accounts receivable turnover for two consecutive years for Chiro-Solutions Company. The accounts receivable turnover ratio measures how efficiently a company uses its assets and is calculated by dividing net credit sales by the average accounts receivable during the period.
Calculating Accounts Receivable Turnover for 20Y2
Net Credit Sales for 20Y2: $2,912,000
Beginning Accounts Receivable for 20Y2: $300,000
Ending Accounts Receivable for 20Y2: $340,000
Average Accounts Receivable for 20Y2: (Beginning Accounts Receivable + Ending Accounts Receivable) / 2 = ($300,000 + $340,000) / 2 = $320,000
Accounts Receivable Turnover for 20Y2 = Net Credit Sales / Average Accounts Receivable = $2,912,000 / $320,000 = 9.1 (rounded to one decimal place)
Calculating Accounts Receivable Turnover for 20Y1
Net Credit Sales for 20Y1: $2,958,000
Beginning Accounts Receivable for 20Y1: $280,000
Ending Accounts Receivable for 20Y1: $300,000
Average Accounts Receivable for 20Y1: (Beginning Accounts Receivable + Ending Accounts Receivable) / 2 = ($280,000 + $300,000) / 2 = $290,000
Accounts Receivable Turnover for 20Y1 = Net Credit Sales / Average Accounts Receivable = $2,958,000 / $290,000 = 10.2 (rounded to one decimal place)