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Given the following information, compute Accounts Receivable Turnover:Gross Sales: $150,000Accounts Receivable, Beginning of Year: $18,000Net Sales: $135,000 Accounts Receivable, End of Year: $22,000A. 6.75B. 7.5C. 6.13D. 6.82

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TomShelby

Answer:

A. 6.75

Explanation:

Account receivable turnover:

[tex]\frac{sales}{average : AR}[/tex]

sales: 135,000

where:

average Account Receivable (AR)

(beginning + ending) / 2

(18,000 + 22,000) / 2 = 40,000 / 2 = 20,000

Account receivable TO

sales / average AR

135,000/20,000 = 6.75

This means the account receivable are collected almost 7 times per year.

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