Excerpts from Colter Corporation's most recent balance sheet appear below:
Sales on account in Year 2 amounted to $1,210 and the cost of goods sold was $720.
-The accounts receivable turnover for Year 2 is closest to:
A) 1.10
B) 0.91
C) 11.52
D) 12.10

Question

Excerpts from Colter Corporation's most recent balance sheet appear below:
  Sales on account in Year 2 amounted to $1,210 and the cost of goods sold was $720.
-The accounts receivable turnover for Year 2 is closest to:
A) 1.10 
B) 0.91 
C) 11.52 
D) 12.10

Quizplus · Accepted Answer

Accounts receivable turnover = Sales on account ÷ Average accounts receivable balance
= $1,210 ÷ $105* = 11.52 (rounded)
*Average accounts receivable balance = ($100 + $110) ÷ 2 = $105

Excerpts from Colter Corporation's Most Recent Balance Sheet Appear Below