Given the following information regarding accounts receivable: Accounts receivable, December 31 $ 7 , 000 Total current assets, Jamuary 1 30 , 000 Sales (25% cash sales) 40 , 000 Total current assets, December 31 25 , 000 Accountsreceivable, J anuary 1 3 , 000 \begin{array}{ll} ext { Accounts receivable, December } 31 & \$ 7,000 \ ext { Total current assets, Jamuary 1 } & 30,000 \ ext { Sales (25\% cash sales) } & 40,000 \ ext { Total current assets, December } 31 & 25,000 \ ext { Accountsreceivable, J anuary 1 } & 3,000\end{array} Accounts receivable, December 31 Total current assets, Jamuary 1 Sales (25% cash sales) Total current assets, December 31 Accountsreceivable, J anuary 1 $7 , 000 30 , 000 40 , 000 25 , 000 3 , 000 What is the accounts receivable turnover?A) 4 timesB) 6 timesC) 8 timesD) 10 times

Question

Given the following information regarding accounts receivable:    Accounts receivable, December  31 $ 7 , 000  Total current assets, Jamuary 1  30 , 000  Sales (25% cash sales)   40 , 000  Total current assets, December  31 25 , 000  Accountsreceivable, J anuary 1  3 , 000 \begin{array}{ll}	ext { Accounts receivable, December } 31  &  \$ 7,000 \	ext { Total current assets, Jamuary 1 }  &  30,000 \	ext { Sales (25\% cash sales)  }  &  40,000 \	ext { Total current assets, December } 31  &  25,000 \	ext { Accountsreceivable, J anuary 1 }  &  3,000\end{array}  Accounts receivable, December  31  Total current assets, Jamuary 1   Sales (25% cash sales)    Total current assets, December  31  Accountsreceivable, J anuary 1  ​ $7 , 000 30 , 000 40 , 000 25 , 000 3 , 000 ​   What is the accounts receivable turnover?A) 4 timesB) 6 timesC) 8 timesD) 10 times

lady samantha dulla · Accepted Answer

Final Answer : B, Explanation :  The accounts receivable turnover is calculated as sales on credit divided by the average accounts receivable. Sales on credit are 75% of total sales (since 25% are cash sales), so $40,000 * 75% = $30,000. The average accounts receivable is ($3,000 + $7,000) / 2 = $5,000. Therefore, the accounts receivable turnover is $30,000 / $5,000 = 6 times.

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