Question

Hickory Hills Pro Shop had a balance in the Accounts Receivable account of

$800,000 at the beginning of the year and a balance of $900,000 at the end of the
year. Net credit sales during the year amounted to $8,040,000. The accounts
receivable turnover was
1) 9.5 times.
2) 10.1 times.
3) 8.9 times.
4) 9.8 times

Answer 1

1) 9.5 times.

Step-by-step explanation:

Accounts Receivable Turnover Ratio = Net Credit Sales / Average Accounts Receivable

Average accounts receivable = beginning accounts receivable + closing accounts receivable / 2

= $800,000 + $900,000/2

=$1,700,000 /2

=$850,000

Accounts Receivable Turnover Ratio = $8,040,000/$850,000

Accounts Receivable Turnover Ratio = 9.4588

=9. 5