Financial statements for Maraby Corporation appear below: Maraby Corporation's accounts receivable turnover for Year 2 was closest to:
A)13.5
B)7.8
C)11.2
D)9.4

Question

Financial statements for Maraby Corporation appear below:   Maraby Corporation's accounts receivable turnover for Year 2 was closest to:
A)13.5 
B)7.8 
C)11.2 
D)9.4

Quizplus · Accepted Answer

To calculate the accounts receivable turnover, we use the formula: 
Accounts Receivable Turnover = Net Credit Sales / Average Accounts Receivable

Using the information given in the financial statements we can calculate:
Net credit sales = $5,000,000
Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2
= ($680,000 + $800,000) / 2
= $740,000

Accounts Receivable Turnover = $5,000,000 / $740,000
= 6.76

Therefore, the closest option is C) 11.2.

Financial Statements for Maraby Corporation Appear Below: Maraby