Asked by Makayla Kortz on Jul 06, 2024
Verified
The following information is available for Edmiston Company. Beginning accounts receivable $70,000 Ending accounts receivable 110,000 Net sales 990,000\begin{array}{lr}\text { Beginning accounts receivable } & \$ 70,000 \\\text { Ending accounts receivable } & 110,000 \\\text { Net sales } & 990,000\end{array} Beginning accounts receivable Ending accounts receivable Net sales $70,000110,000990,000 Instructions
Compute the accounts receivable turnover and the average collection period.
Accounts Receivable Turnover
A financial ratio that measures how effectively a company collects cash from its credit sales by comparing net credit sales with the average accounts receivable.
Average Collection Period
The average amount of time it takes for a business to receive payments owed by its customers for goods or services sold on credit.
Net Sales
The total revenue from sales of goods or services, less returns, allowances for damaged or missing goods, and discounts.
- Calculate accounts receivable turnover and average collection period.
Verified Answer
AP
Abhishek PathakJul 13, 2024
Final Answer :
Accounts receivable turnover = 11 times $990000 /[($70000 + $110000) / 2]
Average collection period = 33.2 days (365 / 11)
Average collection period = 33.2 days (365 / 11)
Learning Objectives
- Calculate accounts receivable turnover and average collection period.