Leary Corporation had net credit sales during the year of $900,000 and cost of goods sold of $540,000. The balance in receivables at the beginning of the year was $120,000 and at the end of the year was $180,000. What was the accounts receivable turnover?
A) 6.0
B) 7.5
C) 5.0
D) 3.6

Question

Quizplus · Accepted Answer

The accounts receivable turnover is calculated as net credit sales divided by the average accounts receivable. Average accounts receivable is ($120,000 + $180,000) / 2 = $150,000. Thus, turnover is $900,000 / $150,000 = 6.0.

Leary Corporation Had Net Credit Sales During the Year of $900,000