Brookville Corporation's books disclosed the following information for the year ended December 31,2014: Brookville's accounts receivable turnover is

Question

Brookville Corporation's books disclosed the following information for the year ended December 31,2014:  Brookville's accounts receivable turnover is

Quizplus · Accepted Answer

The accounts receivable turnover is calculated as net credit sales divided by average accounts receivable. The net credit sales are given as $1,305,000 and the average accounts receivable is calculated as the sum of beginning and ending accounts receivable divided by 2:
($90,000 + $110,000) / 2 = $100,000.
Thus, the accounts receivable turnover is:
$1,305,000 / $100,000 = 13.05 times
However, this gives the turnover for the entire year. To get the turnover for the year ended December 31, 2014, we need to divide by the number of days in the year:
13.05 / 365 = 0.036.
Finally, we can invert this number to get the accounts receivable turnover ratio:
1 / 0.036 = 27.78.
Therefore, the accounts receivable turnover is 27.78 times, which is closest to choice C (5.00 times).

Brookville Corporation's Books Disclosed the Following Information for the Year