Question

Q 8.38: The financial statements of the Robertson Company report net sales of $400,000 and accounts receivable of $40,000 and $20,000 at the beginning of the year and end of year, respectively. What is the accounts receivable turnover for Robertson

Answer 1

Answer:

13.33 times

Explanation:

The computation of the accounts receivable turnover ratio is given below:  

Account receivable turnover ratio = Net credit sales ÷ Average accounts receivable  

where,  

Net credit sales is $400,000

And, the Average accounts receivable would be  

= (Accounts receivable, beginning of year + Accounts receivable, end of year) ÷ 2  

= ($40,000 + $20,000) ÷ 2  

= $30,000

So, the account receivable turnover ratio is

= $400,000 ÷ 30,000

= 13.33 times