The following balance sheet information was provided by O'Connor Company: If net credit sales for Year 2 totaled $149,000, what is the company's most recent accounts receivable turnover?
A)11.64 times
B)20.14 times
C)23.28 times
D)27.59 times

Question

The following balance sheet information was provided by O'Connor Company:  If net credit sales for Year 2 totaled $149,000, what is the company's most recent accounts receivable turnover?
A)11.64 times 
B)20.14 times 
C)23.28 times 
D)27.59 times

Quizplus · Accepted Answer

Accounts receivable turnover is calculated by dividing net credit sales by average accounts receivable. In this case, we need to find the average accounts receivable for Year 2.

Using the balance sheet information provided, we can find that the beginning accounts receivable for Year 2 was $9,000 and the ending accounts receivable for Year 2 was $12,500.

Average accounts receivable = (Beginning accounts receivable + Ending accounts receivable) / 2
= ($9,000 + $12,500) / 2
= $10,750

Now we can calculate the accounts receivable turnover for Year 2:

Accounts receivable turnover = Net credit sales / Average accounts receivable
= $149,000 / $10,750
= 13.86 times

Therefore, the closest choice is C) 23.28 times.

The Following Balance Sheet Information Was Provided by O'Connor Company