Question

Current Attempt in Progress In 2022, Sheridan Company has net credit sales of $1,798,000 for the year. It had a beginning accounts receivable (net) balance of $108,000 and an ending accounts receivable (net) balance of $124,000. Compute Sheridan Company's accounts receivable turnover.

Answer 1

To calculate Sheridan Company's accounts receivable turnover, you need to divide their net credit sales of $1,798,000 by the average of their beginning and ending accounts receivable balances, which yields an accounts receivable turnover of approximately 15.50 times.

Step-by-step explanation:

To calculate the accounts receivable turnover for Sheridan Company, we need to use the formula:

Accounts Receivable Turnover = Net Credit Sales / Average Accounts Receivable

The Average Accounts Receivable is calculated by taking the sum of the beginning and ending accounts receivable balances and dividing by 2.
Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2

Using the figures provided:

• Net Credit Sales = $1,798,000
• Beginning Accounts Receivable = $108,000
• Ending Accounts Receivable = $124,000

So, the Average Accounts Receivable = ($108,000 + $124,000) / 2 = $232,000 / 2 = $116,000

Therefore, the Accounts Receivable Turnover = $1,798,000 / $116,000 ≈ 15.50

Sheridan Company's accounts receivable turnover is approximately 15.50 times.