Question

The financial statements of Vaughn Manufacturing Company report net sales of $643100 and accounts receivable of $92000 and $26000 at the beginning and end of the year, respectively. What is the accounts receivable turnover for Vaughn?

Answer 1

The correct answer is 10.9 times.

Step-by-step explanation:

According to the scenario, computation of the given data are as follow:-

Average account receivable = (Opening account receivable + Closing accounts receivable) ÷ 2

= ($92,000 + $26,000) ÷ 2

= $118,000 ÷ 2

= $59,000

We can calculate the account receivable turnover by using following formula :-

Accounts receivable turnover = Net sales ÷ Average Account receivable

= $643,100 ÷ $59,000

= 10.9 times