The financial statements of the Phelps Manufacturing Company reports net sales of $600,000 and accounts receivable of $80,000 and $40,000 at the beginning of the year and end of year, respectively. What is the accounts receivable turnover for Phelps?
A)10.0 times
B)15.0 times
C)7.5 times
D)5.0 times

Question

Quizplus · Accepted Answer

The accounts receivable turnover is calculated as net sales divided by average accounts receivable. Average accounts receivable is ($80,000 + $40,000) / 2 = $60,000. Thus, the turnover is $600,000 / $60,000 = 10.0 times.

The Financial Statements of the Phelps Manufacturing Company Reports Net