ccounts Receivable Turnover or the Year 2 and Year 1, Montague Inc. reported the
ID: 2403694 • Letter: C
Question
ccounts Receivable Turnover or the Year 2 and Year 1, Montague Inc. reported the following: Year 2 Year 1 Sales Accounts receivable Assume that the accounts receivable were $657,000 at the beginning of Year 1. Lassiter Company reported the following: $7,342,340 $7,010,920 788,400 773,800 Year 2 Year 1 $1,971,000o Sales Accounts receivable Assume that accounts receivable were $211,700 at the beginning of Year 1 a. Compute the average accounts receivable turnover ratio for Montague Inc, and Lassiter Company for Year 2 and Year 1. Round to one ded $1,824,270 175,200 182,500 place. Montague Inc.: Lassiter Company: b. Does Lassiter Company or Montague Inc. have the higher average accounts receivable turnover ratio?Explanation / Answer
Requirement (a) – Accounts Receivable Turnover Ratio
Accounts Receivable Turnover Ratio = Sales / Average Accounts Receivables
Montague Inc
Year 2 Accounts Receivable Turnover Ratio
= $ 73,42,340 / [(788,400 + 773,800)/2]
= 4.7 Times
Year 1 Accounts Receivable Turnover Ratio
= $ 70,10,920 / [(773800 + 657,000)/2]
= 4.9 Times
Lassiter Company
Year 2 Accounts Receivable Turnover Ratio
= $ 18,24,270 / [(1,75,200 + 1,82,500)/2]
= 5.1Times
Year 1 Accounts Receivable Turnover Ratio
= $ 19,71,000 / [(1,82,500 + 2,11,700)/2]
= 5 Times
Requirement (b)
LASSITER COMPANY. Lassiter Company has the higher Accounts Receivable Turnover Ratio of 5.1 Times.
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