The company's accounts receivable turnover for Year 2 is closest to:

A) 1.06
B) 5.06
C) 5.21
D) 0.94

Question

The company's accounts receivable turnover for Year 2 is closest to:A) 1.06B) 5.06C) 5.21D) 0.94

Kwame Waguespack · Accepted Answer

Final Answer : C, Explanation :  Accounts receivable turnover = Net credit sales / Average accounts receivableYear 2:Net credit sales = $3,000,000Average accounts receivable = ($500,000 + $600,000) / 2 = $550,000Accounts receivable turnover = $3,000,000 / $550,000 = 5.4545The closest answer choice is C) 5.21. Accounts receivable turnover = Sales on account ÷ Average accounts receivable*= $1,290,000 ÷ $247,500 = 5.21 (rounded)*Average accounts receivable =($255,000 + $240,000)÷ 2 = $247,500

The company's accounts receivable turnover for Year 2 is closest to:

A) 1.06
B) 5.06
C) 5.21
D) 0.94

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