Rick's Cars had a beginning account receivables balance of $325,000.The ending account receivables balance was $300,000.Net credit sales for the company were $4,200,000.The accounts receivable turnover for Rick's Cars is:
A)12.92.
B)14.
C)13.44.
D)None of the above are correct.

Question

Quizplus · Accepted Answer

Accounts receivable turnover = net credit sales / average accounts receivable balance.

To calculate the average accounts receivable balance, we can add the beginning and ending balances and divide by 2:

Avg. accounts receivable = (beginning accounts receivable + ending accounts receivable) / 2
Avg. accounts receivable = ($325,000 + $300,000) / 2
Avg. accounts receivable = $312,500

Now we can calculate the accounts receivable turnover:

Accounts receivable turnover = $4,200,000 / $312,500
Accounts receivable turnover = 13.44

Therefore, the answer is C) 13.44.

Rick's Cars Had a Beginning Account Receivables Balance of $325,000