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Dorchester Company had the following balances at the end of 2018 and 2019 respectively: Net Credit...

Dorchester Company had the following balances at the end of 2018 and 2019 respectively:

Net Credit Sales - $835,000 for 2018 and $982,000 for 2019.

Accounts Receivable - $80,000 for 2018 and $103,000 for 2019.

Allowance for Doubtful Accounts - $5,000 for 2018 and 7,500 for 2019

Calculate the accounts receivable turnover ratio to one decimal place.

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Answer #1

Net account Recievable (2018)= 80,000 - 5000=75,000

Net account Recievable (2019)= 103,000-7,500= 95,500

Average of account Recievable= (75,000+95,500)/2

= 85,250

Account Recievable turnover ratio (2018) =

credit sales/ net account recievable

= 835,000/75,000

= 11.1 times

Account Recievable turnover ratio (2019)

= Credit sales/ average account Recievable

= 982,000/85,250

= 11.5 times

Note average canont be used in 2018 because of balance of previous year not given

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