Fracus Company had $100,000 in sales on account last year.The beginning accounts receivablebalance was $14,000,and the ending accounts receivable balance was $16,000.The company's accounts receivable turnover was closest to which of the following?
A) 3.33 times.
B) 6.25 times.
C) 6.67 times.
D) 7.14 times.

Question

Quizplus · Accepted Answer

Accounts receivable turnover formula is:
Accounts Receivable Turnover = Net Credit Sales / Average Accounts Receivable

Given that, 
Net credit sales = $100,000
Beginning accounts receivable balance = $14,000
Ending accounts receivable balance = $16,000

Average accounts receivable = (Beginning accounts receivable balance + Ending accounts receivable balance) / 2

= ($14,000 + $16,000) / 2

= $15,000

Therefore, 
Accounts Receivable Turnover = $100,000 / $15,000

= 6.67 times (approximately)

Hence, the closest answer is option C.

Fracus Company Had $100,000 in Sales on Account Last Year