Swiss Clothing Store had a balance in the Accounts Receivable account of $820000 at the beginning of the year and a balance of $780000 at the end of the year. Net credit sales during the year amounted to $7200000. The accounts receivable turnover ratio was
A) 9.0 times.
B) 8.4 times.
C) 9.2 times.
D) 8.8 times.

Question

Quizplus · Accepted Answer

The accounts receivable turnover ratio is calculated by dividing the net credit sales by the average accounts receivable. The average accounts receivable is the sum of the beginning and ending balances divided by 2, which is ($820,000 + $780,000) / 2 = $800,000. The net credit sales are $7,200,000. Therefore, the accounts receivable turnover ratio is $7,200,000 / $800,000 = 9.0 times.

Swiss Clothing Store Had a Balance in the Accounts Receivable