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

Average account receivable turnover will be 26.66

Step-by-step 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
`=(40000+20000)/(2)=$30000`

We have to find the account receivable turnover

Account receivable turnover is give by

Account receivable turnover
`=(total\ net\ sales)/(average\ net\ account\ receivable)=(800000)/(30000)=26.66`

So average account receivable turnover will be 26.66