Modern Products, Inc. had accounts receivable of $240,000 in 2012, and $300,000 in 2013. Net sales for 2013 was $3,000,000, and gross profit margin was $1,200,000. The accounts receivable turnover for 2013 was:
A) 12.5 times.
B) 11.1 times.
C) 10 times.
D) 5 times.

Question

Quizplus · Accepted Answer

Accounts receivable turnover = (Net Sales) / (Average Accounts Receivable)

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

Average accounts receivable for 2013 = ($240,000 + $300,000) / 2 = $270,000

Accounts receivable turnover = $3,000,000 / $270,000 = 11.1 times