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15 November, 18:59

Financial statement data for years ending December 31 for Chiro-Solutions Company follow: 20Y2 20Y1 Sales $2,912,000 $2,958,000 Accounts receivable: Beginning of year 300,000 280,000 End of year 340,000 300,000 a. Determine the accounts receivable turnover for 20Y2 and 20Y1. If required, round the final answers to one decimal place.

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  1. 15 November, 19:08
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    (i) 9.1

    (ii) 10.2

    Explanation:

    Accounts receivable turnover for 20Y2:

    Average accounts receivable:

    = (Beginning account receivable + Ending accounts receivable) : 2

    = (300,000 + 340,000) : 2

    = $320,000

    Accounts receivable turnover ratio;

    = Net annual credit sales : Average accounts receivable

    = $2,912,000 : $320,000

    = 9.1

    Accounts receivable turnover for 20Y1:

    Average accounts receivable:

    = (Beginning account receivable + Ending accounts receivable) : 2

    = (280,000 + 300,000) : 2

    = $290,000

    Accounts receivable turnover ratio;

    = Net annual credit sales : Average accounts receivable

    = $2,958,000 : $290,000

    = 10.2
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