Excerpts from Sydner Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,390 and the cost of goods sold was $900.The accounts receivable turnover for Year 2 is closest to:

A) 6.62
B) 1.10
C) 6.32
D) 0.91

Question

Excerpts from Sydner Corporation's most recent balance sheet appear below:

Sales on account in Year 2 amounted to $1,390 and the cost of goods sold was $900.The accounts receivable turnover for Year 2 is closest to:

A) 6.62
B) 1.10
C) 6.32
D) 0.91

Angel Alvarez · Accepted Answer

Final Answer : C, Explanation :  Accounts receivable turnover = Sales on account ÷ Average accounts receivableTo calculate average accounts receivable, we add the beginning and ending accounts receivable and divide by 2.Beginning accounts receivable = $350 (from balance sheet)Ending accounts receivable = ?We can calculate the ending accounts receivable by using the following formula:Ending accounts receivable = Beginning accounts receivable + Sales on account - Collections on accountCollections on account are not given, but we can assume that all sales were made on credit (on account) and no collections were made during the year. Therefore:Ending accounts receivable = Beginning accounts receivable + Sales on accountEnding accounts receivable = $350 + $1,390 = $1,740Average accounts receivable = ($350 + $1,740) ÷ 2 = $1,045Accounts receivable turnover = $1,390 ÷ $1,045 = 6.32 (rounded to two decimal places)Therefore, the closest answer choice is (C) 6.32.

Excerpts from Sydner Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,390 and the cost of goods sold was $900.The accounts receivable turnover for Year 2 is closest to:

A) 6.62
B) 1.10
C) 6.32
D) 0.91

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Excerpts from Sydner Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,390 and the cost of goods sold was $900.The accounts receivable turnover for Year 2 is closest to:A) 6.62B) 1.10C) 6.32D) 0.91

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Related questions

Excerpts from Sydner Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,390 and the cost of goods sold was $900.The accounts receivable turnover for Year 2 is closest to:

A) 6.62
B) 1.10
C) 6.32
D) 0.91