Question

The following data are taken from the financial statements of Ivanhoe Company. 2017 2016 Accounts receivable (net), end of year $ 581,300 $ 557,500 Net sales on account 4,888,000 4,117,000 Terms for all sales are 1/10, n/45 Collapse question part (a) Compute for each year the accounts receivable turnover. At the end of 2015, accounts receivable was $519,500. (Round answers to 1 decimal place, e.g. 12.5.)

Answer 1

2016 Accounts receivable turnover is 7.65

2017 Accounts receivable turnover is 8.58

Step-by-step explanation:

Accounts receivable turnover is the ratio of the net credit sales divided by the average accounts receivable for the period

For 2016 average accounts receivable=($519,500+$557,500)/2=$538,500.00

Net credit sales in 2016 is $ 4,117,000

Accounts receivable turnover for 2016=$4,117,000/$538,500= 7.65

For 2017 average accounts receivable=($557,500+$ 581,300)/2=$569,400.00

Net credit sales in 2017 is $ 4,888,000

Accounts receivable turnover for 2017=$4,888,000/$569,400= 8.58