Asked by Sarah Dinek on Jun 09, 2024
Verified
Rome Company's net accounts receivable was $200,000 at December 31,2013 and $350,000 at December 31,2014.Net cash sales for 2014 were $250,000.The accounts receivable turnover for 2014 was 8.0,and this turnover figure was computed from net credit sales for the year.
Required:
What were Rome's total net sales for 2014?
Accounts Receivable Turnover
A financial ratio that measures how many times a company collects its average accounts receivable within a given period.
Net Accounts Receivable
The amount of money owed by customers for goods or services that is expected to be collectible, after accounting for allowances for doubtful accounts.
Net Cash Sales
The amount of cash generated from sales transactions, after deducting returns, allowances, and discounts.
- Evaluate a corporation's financial reports to determine essential financial metrics, such as turnover ratios and elements of the Z score formula.
Verified Answer
HM
Hridya MohanJun 16, 2024
Final Answer :
$2,450,000
Feedback:Total net sales equals total credit sales plus total cash sales.The accounts receivable ratio is used to find total credit sales.Average receivables = ($200,000 + $350,000)÷ 2 = $275,000.Accounts receivable turnover = Total credit sales ÷ average receivables.8.0 = Total credit sales ÷ $275,000.Total credit sales = $2,200,000.Total net sales = $2,200,000 + $250,000 = $2,450,000
Feedback:Total net sales equals total credit sales plus total cash sales.The accounts receivable ratio is used to find total credit sales.Average receivables = ($200,000 + $350,000)÷ 2 = $275,000.Accounts receivable turnover = Total credit sales ÷ average receivables.8.0 = Total credit sales ÷ $275,000.Total credit sales = $2,200,000.Total net sales = $2,200,000 + $250,000 = $2,450,000
Learning Objectives
- Evaluate a corporation's financial reports to determine essential financial metrics, such as turnover ratios and elements of the Z score formula.