Question

the financial statements of the darlington company report net sales of $500,000 and accounts receivable of $40,000 and $20,000 at the beginning of the year and end of year, respectively. what is the accounts receivable turnover for darlington?select answer from the options below102321.116.7

Answer 1

The accounts receivable turnover for Darlington Company is approximately 16.7, calculated by dividing the net sales of $500,000 by the average accounts receivable of $30,000.

Step-by-step explanation:

The accounts receivable turnover is a measure of how efficiently a company collects revenue from its credit sales. It is calculated by dividing net sales by the average accounts receivable during a period.

To find the average accounts receivable, we add the beginning and ending balances of accounts receivable and divide by 2. In the case of Darlington Company, the beginning accounts receivable is $40,000 and the ending is $20,000, which gives us an average of ($40,000 + $20,000) / 2 = $30,000.

Therefore, Darlington's accounts receivable turnover is $500,000 (net sales) divided by the $30,000 average accounts receivable, leading to a turnover of approximately 16.7.