Lasiter Corp.reported net credit sales of $2,000,000 and cost of goods sold of $1,400,000 for 2014.On January 1, 2014, accounts receivable was $250,000.Amounts owed by customers increased by $20,000 during 2014.Rounding to two decimal places, what is Lasiter's accounts receivable turnover rate for 2014?

Question

Quizplus · Accepted Answer

Accounts Receivable Turnover = Net Credit Sales / Average Accounts Receivable
Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2

Beginning Accounts Receivable = $250,000
Ending Accounts Receivable = $250,000 + $20,000 = $270,000
Average Accounts Receivable = ($250,000 + $270,000) / 2 = $260,000

Accounts Receivable Turnover = $2,000,000 / $260,000 = 7.69 (rounded to two decimal places)