Jasper Electrical reported net credit sales of $4,500,000 and cost of goods sold of $2,700,000 for the year.The Accounts Receivable balances at the beginning and end of the year were $450,000 and $480,000, respectively.The receivables turnover ratio was
A)5.8 times.
B)9.4 times.
C)9.7 times.
D)10.0 times.

Question

Quizplus · Accepted Answer

The formula for receivables turnover ratio is:

Receivables Turnover = Net Credit Sales / Average Accounts Receivable

To find the average accounts receivable, we need to add the beginning and ending balances and divide by 2:

Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2 
= ($450,000 + $480,000) / 2 
= $465,000

Plugging in the given values, we get:

Receivables Turnover = $4,500,000 / $465,000 
= 9.68

Rounding this off to one decimal place, we get a receivables turnover ratio of 9.7 times.

Therefore, the correct answer is C.

Jasper Electrical Reported Net Credit Sales of $4,500,000 and Cost