ABC's net accounts receivable were $1,000 at December 31, 2013 and $1,200 at December 31, 2014.Net cash sales for 2014 were $400.The accounts receivable turnover for 2014 was 5.0.What were ABC's total net sales for 2014?
A)$5,900
B)$6,400
C)$6,000
D)$11,000
E)None of these choices are correct

Question

Quizplus · Accepted Answer

The accounts receivable turnover ratio is calculated by dividing net sales by average accounts receivable. The average accounts receivable for 2014 is ($1,000 + $1,200) / 2 = $1,100. The accounts receivable turnover ratio is given as 5.0, so net sales for 2014 are $1,100 * 5.0 = $5,500. Adding net cash sales of $400 gives total net sales of $5,900.

ABC's Net Accounts Receivable Were $1,000 at December 31, 2013