Company Abel has total sales of $375,000, of which, $125,000 represent cash sale
ID: 2798325 • Letter: C
Question
Company Abel has total sales of $375,000, of which, $125,000 represent cash sales. Its annual average accounts receivable balance is $42,000. What is its accounts receivable turnover in terms of number of turns? 9. Question Text: Company Abel has total sales of $375,000, of which, $125,000 represent cash sales. Its annual average accounts receivable balance is $42,000. What is its accounts receivable turnover in terms of number of turns? a. =5.95 turns b. 2.97 turns c. 8.92 turns d. 3.0 turns Select one: a. 5.95 turns b. 2.97 turns c. 8.92 turns d. 3.0 turns Question 10 Not yet answered Marked out of 1.00 Not flaggedFlag question Question text What is its accounts receivable turnover in terms of days? Select one: a. 21 days b. 31 days c. 61 days d. 51 days
Explanation / Answer
a.5.95 turns.
accounts receivable turnover = net credit sales / average account receivable
=>here,
net credit sale = total sale - cash sale
=>375,000 - 125,000 =>250,000.
average accounts receivable = $42,000 given,
accounts receivable turnover = $250,000 / 42,000
=>5.95 turns....(rounded to two decimals).
10.accounts receivable turnover in terms of number of days.
c.61 days.
accounts receivable in number of days = [accounts receivable / credit sales] * 365 days
=>[$42,000 / 250,000] * 365 days
=>61.32 days
=>61 days.
=
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