The following information pertains to Unique 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 this company?

Question

Quizplus · Accepted Answer

Accounts Receivable Turnover = Net Credit Sales / Average Accounts Receivable
Net Credit Sales = Total Sales – Cash Sales
Net Credit Sales = $640,000 - $160,000 = $480,000
Average Accounts Receivable = ($90,000 + $110,000) / 2 = $100,000
Accounts Receivable Turnover = $480,000 / $100,000 = 4.8 times (per year)
Therefore, the accounts receivable turnover for Unique Company is 3.4 times (rounded to the nearest tenth).

The Following Information Pertains to Unique Company