Maloney Company had net credit sales during the year of $1,200,000 and cost of goods sold of $750,000. The balance in accounts receivable at the beginning of the year was $120,000, and the end of the year it was $180,000. What was the accounts receivable turnover ratio?

Question

Quizplus · Accepted Answer

Accounts receivable turnover ratio = net credit sales / average accounts receivable

Average accounts receivable = (Beginning accounts receivable + Ending accounts receivable) / 2
                              = ($120,000 + $180,000) / 2
                              = $150,000

Accounts receivable turnover ratio = $1,200,000 / $150,000
                                               = 8.0

Maloney Company Had Net Credit Sales During the Year of $1,200,000