A company has an account receivable turnover ratio of 6. The average accounts receivable during the period are $350,000. What is the amount of net sales for the period?
A) $350,000
B) $2,100,000
C) $58,333
D) Cannot be determined from the information given.

Question

Quizplus · Accepted Answer

The account receivable turnover ratio is calculated as net sales divided by average accounts receivable. We are given the turnover ratio as 6 and the average accounts receivable as $350,000. Rearranging the formula, we get:

Net sales = Account receivable turnover ratio x Average accounts receivable

Net sales = 6 x $350,000

Net sales = $2,100,000

Therefore, the amount of net sales during the period was $2,100,000. The answer is option B.

A Company Has an Account Receivable Turnover Ratio of 6