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17 September, 23:40

Calculating the Average Accounts Receivable, the Accounts Receivable Turnover Ratio, and the Accounts Receivable Turnover in Days Last year, Laurel, Inc. had net sales of $9,420,000 and cost of goods sold of $4,812,000. Laurel had the following balances: January 1 December 31 Accounts receivable $725,000 $775,000 Inventory 450,000 425,000 Required:

Note: Round answers to one decimal place. Assume 365 days per year.

1. Calculate the average accounts receivable.

$

2. Calculate the accounts receivable turnover ratio.

times

3. Calculate the accounts receivable turnover in days.

days

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Answers (1)
  1. 18 September, 01:23
    0
    (1) $750,000

    (2) 12.56 times

    (3) 29.06 days

    Explanation:

    1. Average accounts receivable:

    = (Beginning Accounts receivable + Ending Accounts receivable) : 2

    = (725,000 + 775,000) : 2

    = $750,000

    2. Accounts receivable turnover ratio:

    = Net sales : Average account receivable

    = $9,420,000 : $750,000

    = 12.56 times

    3. Accounts receivable turnover in days:

    = 365 : accounts receivable turnover ratio

    = 365 : 12.56

    = 29.06 days
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