Table 3.1 Information (2010 values)
1. Sales totaled $110,000
2. The gross profit margin was 25 percent.
3. Inventory turnover was 3.0.
4. There are 360 days in the year.
5. The average collection period was 65 days.
6. The current ratio was 2.40.
7. The total asset turnover was 1.13.
8. The debt ratio was 53.8 percent.
-Accounts receivable for CEE in 2010 was ________. (See Table 3.1)
A) $14,056
B) $19,861
C) $14,895
D) $18,333

Question

Table 3.1  Information (2010 values)
1. Sales totaled $110,000
2. The gross profit margin was 25 percent.
3. Inventory turnover was 3.0.
4. There are 360 days in the year.
5. The average collection period was 65 days.
6. The current ratio was 2.40.
7. The total asset turnover was 1.13.
8. The debt ratio was 53.8 percent.
-Accounts receivable for CEE in 2010 was ________. (See Table 3.1)
A) $14,056 
B) $19,861 
C) $14,895 
D) $18,333

Quizplus · Accepted Answer

Accounts receivable turnover = 360 days / average collection period = 360 days / 65 days = 5.54
Net Sales / Accounts Receivable = Accounts Receivable Turnover
Therefore, Accounts Receivable = Net Sales / Accounts Receivable Turnover
Accounts Receivable = $110,000 / 5.54 = $19,860.94 which is closest to option B:  $19,861.

Table 3.1 Information (2010 Values)