Spanzer Clothing Store had a balance in the Accounts Receivable account of $780,000 at the beginning of the year and a balance of $820,000 at the end of the year. Net credit sales during the year amounted to $5,440,000. The receivable turnover ratio was:
A) 6.6 times.
B) 6.8 times.
C) 7.2 times.
D) 7 times.

Question

Quizplus · Accepted Answer

The receivable turnover ratio is calculated as Net Credit Sales / Average Accounts Receivable. Average Accounts Receivable = ($780,000 + $820,000) / 2 = $800,000. Receivable Turnover Ratio = $5,440,000 / $800,000 = 6.8 times.

Spanzer Clothing Store Had a Balance in the Accounts Receivable