The financial statements of Gervais Manufacturing Company report net sales of $500,000 and accounts receivable of $80,000 and $40,000 at the beginning and end of the year, respectively. What is the accounts receivable turnover for Gervais?

Question

Quizplus · Accepted Answer

The formula for accounts receivable turnover is net sales divided by the average accounts receivable. The average accounts receivable is the sum of the beginning and ending accounts receivable divided by 2.

Average accounts receivable = ($80,000 + $40,000) / 2 = $60,000

Accounts receivable turnover = $500,000 / $60,000 = 8.3 times

The Financial Statements of Gervais Manufacturing Company Report Net Sales