The following information pertains to Ortiz Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. What is the accounts receivable turnover for Ortiz?
A)1.3 times
B)1.1 times
C)2.8 times
D)12.7 times

Question

The following information pertains to Ortiz Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.   What is the accounts receivable turnover for Ortiz?
A)1.3 times 
B)1.1 times 
C)2.8 times 
D)12.7 times

Quizplus · Accepted Answer

Accounts receivable turnover = Net credit sales / Average accounts receivable

Net credit sales = $742,000
Average accounts receivable = ($45,000 + $60,000) / 2 = $52,500

Accounts receivable turnover = $742,000 / $52,500 = 14.1 times

Therefore, the best choice is C, which is the only option closest to the calculated turnover ratio.

The Following Information Pertains to Ortiz Company