The net accounts receivable for 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.Sales = 1,445,000/(1 - .15)= $1,700,000.

Question

Quizplus · Accepted Answer

The net accounts receivable at the beginning and end of the year can be used to calculate the average accounts receivable for the year, which is ($150,000 + $190,000) / 2 = $170,000. The accounts receivable turnover is 8.5, which means that the company collected its average accounts receivable 8.5 times during the year. Using this information, we can calculate credit sales for the year: $170,000 x 8.5 = $1,445,000. To find total sales, we need to add cash sales to credit sales. We know that cash sales were 15% of total sales, so credit sales must represent 85% of total sales. Therefore, total sales = $1,445,000 / 0.85 = $1,700,000. The best choice is option C.

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