During the current accounting period,revenue from credit sales is $671,000.The accounts receivable balance is $51,480 at the beginning of the period and $52,200 at the end of the period.Which of the following statements is true?
A)The receivables turnover ratio is 12.9.
B)On average,it takes 12.9 days to collect payment from credit customers.
C)The receivables turnover ratio is 28.3.
D)On average,the company sells its inventory every 28.3 days.

Question

Quizplus · Accepted Answer

The receivables turnover ratio is calculated by dividing net credit sales by the average accounts receivable balance. 
Net credit sales = $671,000 
Average accounts receivable balance = ($51,480 + $52,200) / 2 = $51,840 
Receivables turnover ratio = $671,000 / $51,840 = 12.93 
Therefore, the correct statement is A: The receivables turnover ratio is 12.9.

During the Current Accounting Period,revenue from Credit Sales Is $671,000