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Modern Products, Inc. had accounts receivable of $320,000 in 2019, and $358,000 in 2020. Net...

Question:

Modern Products, Inc. had accounts receivable of {eq}\$320,000 {/eq} in 2019, and {eq}\$358,000 {/eq} in 2020. Net sales for 2020 were {eq}\$3,160,000 {/eq}, and gross profit was {eq}\$1,600,000 {/eq}. The accounts receivable turnover for 2020 was {eq}\rule{1cm}{0.15mm} {/eq}.

Accounts Receivable:

Accounts receivable is a current asset on the balance sheet that represents amounts due from credit customers. Companies often extend credit to customers and allow them to pay for goods or services at a later date.

Answer and Explanation:

Answer: 9.32

Explanation:

Accounts receivable turnover is calculated as:

Net credit sales / Average accounts receivable

$3,160,000 / $339,000 = 9.32

Average accounts receivable is calculated as:

($320,000 + $358,000) / 2 = $339,000


Learn more about this topic:

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Accounts Receivable: Definition, Process & Examples

from Accounting 101: Financial Accounting

Chapter 7 / Lesson 1
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