Exercise 9-13: Accounts receivable turnover L.O. A1


The following information is from the annual financial statements of Lucilla Company.




2009
2008
2007

Net Sales
$
262,000
$
193,000
$
245,000

Accounts Receivable, net (year-end)

42,700

40,500

37,200


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Required:

Compute its accounts receivable turnover for 2008 and 2009. (Round your answers to one decimal place.)



Year 2008 accounts receivable turnover :



Year 2009 accounts receivable turnover :

I also need help with this question

To calculate the accounts receivable turnover, you need to divide the net credit sales for the year by the average accounts receivable balance for the year. Here's how you can calculate it:

Step 1: Calculate the average accounts receivable balance for each year:
For 2008: (Beginning accounts receivable + Ending accounts receivable) / 2
For 2009: (Beginning accounts receivable + Ending accounts receivable) / 2

Step 2: Calculate the accounts receivable turnover for each year:
For each year, divide the net credit sales by the average accounts receivable balance.

Let's calculate it:

For 2008:
Beginning accounts receivable: $40,500
Ending accounts receivable: $42,700
Average accounts receivable: ($40,500 + $42,700) / 2 = $41,600

Net credit sales: $193,000

Accounts receivable turnover for 2008: $193,000 / $41,600 = 4.6 (rounded to one decimal place)

For 2009:
Beginning accounts receivable: $42,700
Ending accounts receivable: $37,200
Average accounts receivable: ($42,700 + $37,200) / 2 = $39,950

Net credit sales: $262,000

Accounts receivable turnover for 2009: $262,000 / $39,950 = 6.56 (rounded to one decimal place)

Therefore, the accounts receivable turnover for 2008 is 4.6, and for 2009 it is 6.6.