Mr. Sparks, the owner of School Supplies, Inc., is interested in keeping control over accounts receivable. He understands that accounts receivable turnover will give a good indication of how well receivables are being managed. School Supplies, Inc. does seventy percent of its business during June, July and August. The terms of sale are 2/10, n/60. Net sales for the year ended December 31, 2019, and receivables balances are:
Net Sales = $1,500,000;
Receivables at January 1, 2019 = $80,000;
Receivables at December 31, 2019 = $70,000.
1. What is the average accounts receivable turnover calculated from the data above?
Answers:
a. 20.0 times
b. 25.0 times
c. 22.7 times
d. 18.75 times