Fracus Company had $100,000 in sales on account last year.The beginning accounts receivable balance was $14,000 and the ending accounts receivable balance was $16,000.The company's accounts receivable turnover was closest to:
A) 3.33 times.
B) 6.25 times.
C) 6.67 times.
D) 7.14 times.

Question

Quizplus · Accepted Answer

The accounts receivable turnover can be calculated as:

Accounts Receivable Turnover = Sales on Account / Average Accounts Receivable

Where Average Accounts Receivable is the average of beginning and ending accounts receivable balances.

Sales on Account = $100,000

Beginning Accounts Receivable = $14,000

Ending Accounts Receivable = $16,000

Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2 = ($14,000 + $16,000) / 2 = $15,000

Accounts Receivable Turnover = $100,000 / $15,000 = 6.67 times

Therefore, the closest answer choice is C) 6.67 times.

Fracus Company Had $100,000 in Sales on Account Last Year