Question

Edward Corporation had net credit sales during the year of 750,000 and cost of goods sold of 500,000. The balance in receivables at the beginning of the year was 75,000 and at the end of the year was 110,000. The balance of total assets at the beginning of the year was 1,200,000 and at the end of the year was 1,500,000. How much is the accounts receivables turnover?

1) 10.0
2) 8.11
3) 6.81
4) 5.41

Answer 1

The accounts receivable turnover is calculated by dividing the net credit sales by the average accounts receivable. In this case, the accounts receivable turnover is 8.11.

Step-by-step explanation:

The accounts receivable turnover can be calculated by dividing the net credit sales by the average accounts receivable. To find the average accounts receivable, we add the beginning balance of receivables to the ending balance of receivables and divide by 2. In this case, the beginning balance was $75,000 and the ending balance was $110,000.

So, the average accounts receivable is ($75,000 + $110,000)/2 = $92,500.

The accounts receivable turnover is then calculated as $750,000/$92,500 = 8.11.

Therefore, the correct answer is option 2) 8.11.