Question

Danforth Corp has net credit sales of $435,000, and Accounts Receivable turnover of 20.0. What are Danforth Corps average net Accounts receivable?

Answer 1

Danforth Corp's average net Accounts Receivable is calculated using the Accounts Receivable Turnover ratio, which in this case leads to an average of $21,750, based on the provided net credit sales of $435,000 and a turnover ratio of 20.0.

Step-by-step explanation:

To calculate Danforth Corp's average net Accounts receivable, we use the formula for the Accounts Receivable turnover ratio, which is:

Accounts Receivable Turnover = Net Credit Sales / Average Accounts Receivable

In this case, we are given that Danforth Corp has net credit sales of $435,000 and an Accounts Receivable turnover of 20.0. Thus, we solve for Average Accounts Receivable as follows:

Average Accounts Receivable = Net Credit Sales / Accounts Receivable Turnover

Average Accounts Receivable = $435,000 / 20.0

Average Accounts Receivable = $21,750

Therefore, Danforth Corp's average net Accounts receivable is $21,750.