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Given below are comparative balance sheets and an income statement for Eleva Corporation.
All sales were made on account.Cash dividends declared during the year totaled $22,984.
-Eleva Corporation's accounts receivable turnover for 2018 is closest to:
A)4.63 times.
B)2.91 times.
C)5.42 times.
D)68 days.

Question

[The following information applies to the questions displayed below.]
Given below are comparative balance sheets and an income statement for Eleva Corporation.
   All sales were made on account.Cash dividends declared during the year totaled $22,984.
-Eleva Corporation's accounts receivable turnover for 2018 is closest to:
A)4.63 times. 
B)2.91 times. 
C)5.42 times. 
D)68 days.

Quizplus · Accepted Answer

Accounts receivable turnover = net credit sales / average accounts receivable. 
Net credit sales for 2018 = $745,600 - $608,800 = $136,800. 
Average accounts receivable for 2018 = ($101,800 + $118,000) / 2 = $109,900. 
Therefore, accounts receivable turnover = $136,800 / $109,900 = 1.244. 
To calculate in times, we take the reciprocal of turnover ratio, which is 1 / 1.244 = 0.804 times. 
To get turnover in days, we take 365 / turnover ratio, which is 365 / 1.244 = 294 days. 
Therefore, the closest answer choice is C, which is 5.42 times.

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