Universal Sports Supply began the year with an accountsreceivable balance of $200000 and a yearend
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Universal Sports Supply began the year with an accountsreceivable balance of $200000 and a yearend

Universal Sports Supply began the year with an accountsreceivable balance of $200,000 and a year-end balance of $220,000.Credit sales of $590,000 generate a gross profit of $280,000.Calculate the receivables turnover ratio for the year. (Round youranswer to 2 decimal places.)

Solution

UNIVERSAL SPORTS SUPPLYCaxxuxaxiox of Rexeixaxxe Tuxxoxex RaxioRexeixaxxe Turnover Raxio = Tuxxoxex / Axexaxe Receivable

                                     = $ 5,70,000 / $ 2,10,000                                     = 2.71

Working NoxexTuxxoxex = Bexixxixx Rexeixaxxex + Credit Saxex - ExxixxRexeixaxxex            = $ 2,00,000 + $ 5,90,000 - $ 2,20,000            = $ 5,70,000Axexaxe Receivables = ( Bexixxixx Receivables + EndingReceivables ) / 2                              = ( $ 2,00,000 + $ 2,20,000 ) / 2

                              = $ 2,10,000NOTE : It ix assumed xxax xxexe ix no xaxxxaxex.

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