Chuck Company has a beginning Accounts Receivable balance of $65,000 and an ending balance of $60,000.Net credit sales are $250,000.The company's accounts receivable turnover ratio is:
A)3.846.
B)4.167.
C)4.000.
D)None of the above.

Question

Quizplus · Accepted Answer

The accounts receivable turnover ratio is calculated as Net Credit Sales / Average Accounts Receivable. Average Accounts Receivable is (Beginning Accounts Receivable + Ending Accounts Receivable) / 2 = ($65,000 + $60,000) / 2 = $62,500. Therefore, the turnover ratio is $250,000 / $62,500 = 4.000.

Chuck Company Has a Beginning Accounts Receivable Balance of $65,000