XYZ's receivables turnover is 10x. The accounts receivable at year-end are $600,000. The average collection period is 90 days (3 months). What was the sales figure for the year?
A) $60,000
B) $6,000,000
C) $24,000,000
D) none of the above
1 year ago
1 year ago
To calculate the sales figure for the year, we can use the formula for accounts receivable turnover:
Receivables Turnover = Net Credit Sales / Average Accounts Receivable
Given that the receivables turnover is 10x and the average collection period is 90 days, we can calculate the average accounts receivable:
Average Accounts Receivable = Accounts Receivable / Receivables Turnover
Average Accounts Receivable = $600,000 / 10 = $60,000
Now, to find the net credit sales, we can rearrange the formula:
Net Credit Sales = Receivables Turnover * Average Accounts Receivable
Net Credit Sales = 10 * $60,000 = $600,000
Therefore, the sales figure for the year is B) $6,000,000.
1 year ago
To find the sales figure for the year, we can use the formula:
Sales = Receivables Turnover * Average Accounts Receivable
First, let's calculate the average accounts receivable. Since the average collection period is given in days, we need to convert it to months:
Average Collection Period (in months) = Average Collection Period (in days) / Number of Days in a Month
Average Collection Period = 90 days / 30 days (assuming 30 days in a month) = 3 months
Next, let's calculate the average accounts receivable:
Average Accounts Receivable = Accounts Receivable at Year-End / Average Collection Period
Average Accounts Receivable = $600,000 / 3 = $200,000
Now, let's calculate the sales figure using the receivables turnover:
Sales = Receivables Turnover * Average Accounts Receivable
= 10 * $200,000
= $2,000,000
So, the sales figure for the year was $2,000,000.
Therefore, the answer is D) none of the above.