﻿ 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.