The financial statements of Gervais Manufacturing Company report net sales of $500,000 and accounts receivable of $80,000 and $40,000 at the beginning and end of the year, respectively.What is the accounts receivable turnover for Gervais?

Question

Quizplus · Accepted Answer

Accounts receivable turnover is calculated by dividing net sales by the average accounts receivable. 
Average accounts receivable = (beginning accounts receivable + ending accounts receivable) / 2 
Average accounts receivable = ($80,000 + $40,000) / 2 = $60,000 
Accounts receivable turnover = net sales / average accounts receivable 
Accounts receivable turnover = $500,000 / $60,000 = 8.3 times. Therefore, the best choice is B.

The Financial Statements of Gervais Manufacturing Company Report Net Sales