Corona Company's balance sheet accounts follow:

What is Corona Company's accounts receivable turnover ratio for 2010 assuming net sales for the period were $1,236,783?

Question

Corona Company's balance sheet accounts follow:

What is Corona Company's accounts receivable turnover ratio for 2010 assuming net sales for the period were $1,236,783?

Quizplus · Accepted Answer

Accounts Receivable Turnover Ratio = Net Credit Sales / Average Accounts Receivable

To find out the average accounts receivable, we need to add the beginning and ending accounts receivable and divide by 2:

Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2
Average Accounts Receivable = ($87,540 + $76,680) / 2
Average Accounts Receivable = $82,110

Using the formula, we can calculate the accounts receivable turnover ratio:

Accounts Receivable Turnover Ratio = Net Credit Sales / Average Accounts Receivable
Accounts Receivable Turnover Ratio = $1,236,783 / $82,110
Accounts Receivable Turnover Ratio = 15.05

Therefore, the correct answer is B) 25.99.

Corona Company's Balance Sheet Accounts Follow