The net accounts receivablefor Andante Company were $150,000 at the beginning of the most recent year and $190,000 at the end of the year.If the accounts receivable turnover for the year was 8.5,and 15% of total sales were cash sales,what were the total sales for the year?
A) $1,445,000.
B) $1,500,000.
C) $1,700,000.
D) $1,900,000.

Question

Quizplus · Accepted Answer

The accounts receivable turnover is calculated as sales divided by the average accounts receivable. The average accounts receivable is ($150,000 + $190,000) / 2 = $170,000. With a turnover of 8.5, sales on credit = 8.5 * $170,000 = $1,445,000. Since 15% of total sales were cash sales, this means 85% of total sales were credit sales. Therefore, total sales = $1,445,000 / 0.85 = $1,700,000.

The Net Accounts Receivablefor Andante Company Were $150,000 at the Beginning