The net accounts receivable for Andante Company were $150,000 at the beginning of the most recent year and $190,000 at the end of the year.If the accounts receivable turnover for the year was 8.5,and 15% of total sales were cash sales,then the total sales for the year were:
A) $1,445,000.
B) $1,500,000.
C) $1,700,000.
D) $1,900,000.

Question

Quizplus · Accepted Answer

Accounts receivable turnover = Total credit sales / Average accounts receivable

We are given the accounts receivable turnover as 8.5, and the net accounts receivable at the beginning and end of the year. We can use this information to find the average accounts receivable:

Average accounts receivable = (Beginning accounts receivable + Ending accounts receivable) / 2 
= ($150,000 + $190,000) / 2 
= $170,000

We are also given that 15% of total sales were cash sales. Let's assume that total sales were S. So, credit sales would be 85% of S.

Now we can use the accounts receivable turnover formula to find the credit sales:

8.5 = (85% of S) / $170,000 
0.085 * $170,000 = 0.85S 
S = $1,700,000

Therefore, the total sales for the year were $1,700,000, option C is correct.

The Net Accounts Receivable for Andante Company Were $150,000 at the Beginning