Corona Company's balance sheet accounts follow: What is Corona Company's accounts receivable turnover ratio for 2013, assuming net sales for the period were $1,236,783?
A) 27.21
B) 25.99
C) 22.91
D) 30.05
E) 15.85

Question

Corona Company's balance sheet accounts follow:  What is Corona Company's accounts receivable turnover ratio for 2013, assuming net sales for the period were $1,236,783?
A) 27.21 
B) 25.99 
C) 22.91 
D) 30.05 
E) 15.85

Quizplus · Accepted Answer

Accounts receivable turnover ratio = Net credit sales / Average accounts receivable

Average accounts receivable = (Accounts receivable at beginning of year + Accounts receivable at end of year) / 2

Average accounts receivable for 2013 = ($164,897 + $180,293) / 2 = $172,595.

Net credit sales for 2013 = $1,236,783 (given in the question).

Accounts receivable turnover ratio = $1,236,783 / $172,595 = 7.16

Therefore, the correct answer is B) 25.99 (since 365 days / accounts receivable turnover ratio = 365 / 7.16 ≈ 25.99).

Corona Company's Balance Sheet Accounts Follow: What Is Corona