Exercise 16-30 Average Accounts Receivable, Accounts Receivable Turnover Ratio,
ID: 2424844 • Letter: E
Question
Exercise 16-30 Average Accounts Receivable, Accounts Receivable Turnover Ratio, Accounts Receivable Turnover in Days
Knowlton Company had net sales of $3,906,000. Knowlton had the following balances:
January 1
December 31
Accounts receivable
$419,000
$398,100
Inventories
128,000
132,070
Required:
Note: Round answers to one decimal place.
1.Calculate the average accounts receivable.
2.Calculate the accounts receivable turnover ratio.
3.Calculate the accounts receivable turnover in days.
January 1
December 31
Accounts receivable
$419,000
$398,100
Inventories
128,000
132,070
Explanation / Answer
1. Average accounts receivable = ( 419,000 + 398,100 ) /2 = $ 408,550
2. Accounts receivable turnover ratio = Net sales / average accounts receivable = 3,906,000 /408,550 = 9.6 times
3. Accounts receivable turnover in days = 365 / 9.6 = 38 days
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