LKN Company had net credit sales of $5,005,000 and cost of goods sold of $3,500,000 for the year. The Accounts Receivable balances at the beginning and end of the year were $600,000 and $700,000, respectively. The accounts receivable turnover was
A) 8.4 times.
B) 7.7 times.
C) 3.9 times.
D) 7.1 times.

Question

Quizplus · Accepted Answer

Accounts Receivable Turnover = Net Credit Sales / Average Accounts Receivable

Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2

Average Accounts Receivable = ($600,000 + $700,000) / 2 = $650,000

Accounts Receivable Turnover = $5,005,000 / $650,000 = 7.7 times.

Therefore, the answer is B.

LKN Company Had Net Credit Sales of $5,005,000 and Cost