A. This answer incorrectly uses cost of goods sold (instead of credit sales) in the numerator.
B. This answer incorrectly uses ending receivables (instead of average receivables) in the numerator.
C. Accounts receivable turnover is calculated as net credit sales divided by average accounts receivable. Average accounts receivable was $37,500 (the average of $45,000 and $30,000), and given information that credit sales were $300,000, we get a receivables turnover of 8.
D. This answer includes only the year end receivables in the denominator (instead of the average receivablesand uses cost of goods sold (instead of credit sales) in the numerator.
