Nickel Store had net credit sales of $15,000,000 and cost of goods sold of $5,000,000 for the year.The Accounts Receivable balances at the beginning and end of the year were $875,000 and $375,000 respectively.The accounts receivable turnover ratio was:
A) 15 times.
B) 10 times.
C) 11 times.
D) 24 times.

Question

Quizplus · Accepted Answer

Accounts Receivable Turnover Ratio = Net Sales / Average Accounts Receivable
Average Accounts Receivable = (Beginning Receivables + Ending Receivables) / 2
= ($875,000 + $375,000) / 2
= $625,000
 
Accounts Receivable Turnover Ratio = $15,000,000 / $625,000 = 24 times

Nickel Store Had Net Credit Sales of $15,000,000 and Cost