The following transactions occurred over the months of September to December at

Question

The following transactions occurred over the months of September to December at Nicole’s Getaway Spa (NGS).

Sold spa merchandise to Ashley Welch Beauty for $1,600 on account; the cost of these goods to NGS was $820.

Sold merchandise to Kelly Fast Nail Gallery for $370 on account; the cost of these goods to NGS was $160.

Sold merchandise to Raea Gooding Wellness for $220 on account; the cost of these goods to NGS was $150.

Received $1,080 from Ashley Welch Beauty for payment on its account.

Assume the end of the previous year showed net accounts receivable of $760, and net sales for the current year are $8,600. Calculate the accounts receivable turnover ratio. (Do not round intermediate calculations. Round your answer to 1 decimal place.)

The following transactions occurred over the months of September to December at Nicole’s Getaway Spa (NGS).

Explanation / Answer

Accounts receivable turnover ratio = 9.20 Times

Accounts Receivable - Ashley Welch Beauty

Sale value of merchandise $ 1600

Less : Collection ($ 1080)                $520

Accounts Receivable - Kelly Fast Nail Gallery

Sale value of merchandise $ 370

Accounts Receivable - Raea Gooding Wellness

Sale value of merchandise $ 220

Ending Accounts Receivable Balance $ 1110                                    

Previous Years Accounts Recivable $ 760

Average Accounts Receivables ($ 1110 + $ 760 ) / 2 $ 935

Accounts receivable turnover ratio = Net Sales / Average Accounts Receivables

= $ 8600 / $ 935

= 9.20 Times

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