D is corrent. The formula to compute accounts receivable turnover is| Net credit sales | | Average accounts receivable |
Average accounts receivable is estimated by taking the sum of beginning and ending accounts receivable and dividing by two [($75,000 + $50,000) / 2 = $62,500]. Therefore, the accounts receivable turnover is 8 x ($500,000 / $62,500).A is incorrect. The formula to compute accounts receivable turnover is| Net credit sales | | Average accounts receivable |
Average accounts receivable is estimated by taking the sum of beginning and ending accounts receivable and dividing by two [($75,000 + $50,000) / 2 = $62,500]. Therefore, the accounts receivable turnover is 8 x ($500,000 / $62,500). B is incorrect. The formula to compute accounts receivable turnover is| Net credit sales | | Average accounts receivable |
Average accounts receivable is estimated by taking the sum of beginning and ending accounts receivable and dividing by two [($75,000 + $50,000) / 2 = $62,500]. Therefore, the accounts receivable turnover is 8 x ($500,000 / $62,500). C is incorrect. The formula to compute accounts receivable turnover is| Net credit sales | | Average accounts receivable |
Average accounts receivable is estimated by taking the sum of beginning and ending accounts receivable and dividing by two [($75,000 + $50,000) / 2 = $62,500]. Therefore, the accounts receivable turnover is 8 x ($500,000 / $62,500). |
