Question

Dorchester Company had the following balances at the end of 2018 and 2019 respectively: Net Credit Sales - $875,000 for 2018 and $1,032,000 for 2019. Accounts Receivable - $84,000 for 2018 and $107,000 for 2019. Allowance for Doubtful Accounts - $4,000 for 2018 and 7,500 for 2019 Calculate the accounts receivable turnover ratio to one decimal place.

Answer 1

PoyPoy

Step-by-step explanation:

Answer 2

Answer:Accounts Receivable Turnover Ratio = 11.50 times

Step-by-step explanation:

Accounts Receivable Turnover Ratio is calculated using

Net Credit Sales / Average Accounts Receivable

Net Credit Sales for 2019 = $1,032,000

Net Accounts Receivable in 2018 = Accounts Receivable in 2018 - Allowance for Doubtful Accounts in 2018

= $84,000 - $4,000

= $80,000

Net Accounts Receivable in 2019 = Accounts Receivable in 2019 - Allowance for Doubtful Accounts in 2019

= $107,000 - $7,500

= $99,500

Average Accounts Receivable = (Net Accounts Receivable in 2018 + Net Accounts Receivable in 2019) / 2

= ($80,000 + $99,500) / 2

= $179,500 / 2

= $89,750

Accounts Receivable Turnover Ratio = Net Credit Sales in 2019 / Average Accounts Receivable

= $1,032,000/ $89,750

= 11.498

= 11.50 times