The financial statements of the darlington company report net sales of $500,000 and accounts receivable of $40,000 and $20,000 at the beginning of the year and end of year, respectively. What is the accounts receivable turnover for darlington?.

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anthougo anthougo · Answer 1 · 2022-04-15T11:33:36+02:00

The accounts receivable turnover, based on the financial statements for Darlington Company is 16.7x.

The accounts receivable turnover is the ratio of average accounts receivable for a period and the net credit sales.

The ratio shows the efficiency of collecting cash from credit customers.

Net sales = $500,000

Accounts receivable:

Ending balance = $40,000

Beginning balance = $20,000

Average Accounts Receivable = $30,000 ($40,000 + $20,000)/2

Accounts receivable turnover = Net Sales/Average Accounts Receivable

= 16.7 ($500,000/$30,000)

Thus, the accounts receivable turnover for Darlington Company is 16.7x.

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