Given the following information regarding accounts receivable: $\begin{array}{ll}
\text { Accounts receivable, December } 31 & \$ 7,000 \
\text { Total current assets, Jamuary 1 } & 30,000 \
\text { Sales (25\% cash sales) } & 40,000 \
\text { Total current assets, December } 31 & 25,000 \
\text { Accountsreceivable, J anuary 1 } & 3,000
\end{array}$ What is the accounts receivable turnover?
A)4 times
B)6 times
C)8 times
D)10 times

Question

Quizplus · Accepted Answer

The accounts receivable turnover is calculated as sales on credit divided by the average accounts receivable. Sales on credit are 75% of total sales (since 25% are cash sales), so $40,000 * 75% = $30,000. The average accounts receivable is ($3,000 + $7,000) / 2 = $5,000. Therefore, the accounts receivable turnover is $30,000 / $5,000 = 6 times.

Given the Following Information Regarding Accounts Receivable What Is the Accounts Receivable Turnover? A)4 Times B)6 Times

Given the Following Information Regarding Accounts Receivable What Is the Accounts Receivable Turnover?
A)4 Times
B)6 Times