Lasiter Corp.reported net credit sales of $2,000,000 and cost of goods sold of $1,400,000 for 2017.On January 1,2017,accounts receivable was $250,000.Amounts owed by customers increased by $20,000 during 2017.Rounding to two decimal places,what is Lasiter's accounts receivable turnover ratio for 2017?
A)8.33
B)8.00
C)7.69
D)7.41

Question

Quizplus · Accepted Answer

Accounts receivable turnover ratio = net credit sales / average accounts receivable

Average accounts receivable = (beginning accounts receivable + ending accounts receivable) / 2
Ending accounts receivable = beginning accounts receivable + increase in accounts receivable = $250,000 + $20,000 = $270,000
Beginning accounts receivable = $250,000

Average accounts receivable = ($250,000 + $270,000) / 2 = $260,000

Accounts receivable turnover ratio = $2,000,000 / $260,000 = 7.69