Lasiter Corp. reported net credit sales of $2,000,000 and cost of goods sold of $1,400,000 for 2014. On January 1, 2014, accounts receivable was $250,000. Amounts owed by customers increased by $20,000 during 2014. Rounding to two decimal places, what is Lassiter's accounts receivable turnover rate for 2014

The correct answer is 7.69.

Explanation:

According to the scenario, the given data are as follows:

Net credit sales = $2,000,000

Cost of goods sold = $1,400,000

Account receivable = $250,000

During year Account receivable = $250,000 + $20,000 = $270,000

So, we can calculate the accounts receivable turnover rate by using following formula:

Turnover rate = Net credit sales : Average account receivable

Where Average account receivable = ($250,000 + $270,000) : 2

= $260,000

So, by putting the value we get,

Turnover rate = $2,000,000 : $260,000

= 7.69

Hence, the accounts receivable turnover rate is 7.69.