Somen to Park Corporation had net credit sales of $5,075,000 and cost of goods sold of $3,750,000 for the year. The Accounts Receivable balances at the beginning and end of the year were $650,000 and $750,000, respectively. The accounts receivable turnover was
A) 7.8 times.
B) 6.8 times.
C) 7.3 times.
D) 5.4 times.

Question

Quizplus · Accepted Answer

The accounts receivable turnover is calculated as net credit sales divided by the average accounts receivable. Average accounts receivable = ($650,000 + $750,000) / 2 = $700,000. Turnover = $5,075,000 / $700,000 = 7.25, which rounds to 7.3 times.

Somen to Park Corporation Had Net Credit Sales of $5,075,000