Question

Based on the following data, what is the accounts receivable turnover?

Sales on account during year $507,154
Cost of goods sold during year 200,993
Accounts receivable, beginning of year 45,454
Accounts receivable, end of year 54,550
Inventory, beginning of year 98,401 113,155 Inventory, end of year
a. 4.5
b. 10.1
c. 2.5
d. 11.2

Answer 1

The accounts receivable turnover is calculated by dividing net credit sales by the average accounts receivable. Using the given data, the turnover is approximately 10.1, which corresponds to answer choice b.

option b is the correct

Step-by-step explanation:

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

Accounts Receivable Turnover = Net Credit Sales / Average Accounts Receivable

We are given the following data:

• Sales on account during year: $507,154
• Accounts receivable, beginning of year: $45,454
• Accounts receivable, end of year: $54,550

First, determine the average accounts receivable:

Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2

Average Accounts Receivable = ($45,454 + $54,550) / 2 = $50,002

Then, calculate the accounts receivable turnover:

Accounts Receivable Turnover = $507,154 / $50,002 ≈ 10.1

Therefore, the correct answer is b. 10.1.