Jeter Industries has an accounts receivable turnover ratio of 4.5.If Jeter has an accounts receivable balance of $100,000,what is Jeter's average daily credit sales?
A) $745.23
B) $1,232.88
C) $22,222.22
D) $1,893.45

Question

Quizplus · Accepted Answer

Accounts receivable turnover ratio is calculated as total credit sales divided by average accounts receivable. 
We can use this formula to find the average credit sales:
4.5 = Credit Sales / $100,000
Credit Sales = $450,000
To find the average daily credit sales, divide the total credit sales by the number of days in the year:
$450,000 / 365 = $1,232.88 
Therefore, the answer is B, $1,232.88.

Jeter Industries Has an Accounts Receivable Turnover Ratio of 4