Accounts Receivable Turnover Rate

question 149

Essay

Accounts receivable turnover rate
During 2010, Larsen Company's accounts receivable averaged $750,000. Larsen's 2010 income statement reported net sales of $6,780,000, uncollectible accounts expense of $160,000, and net income of $768,000. (Assume 365 days in a year.)
Using the information, compute the following for Larsen Company:
(a) Accounts receivable turnover: (Round to the nearest two decimals.)
(b) Average number of days to collect accounts receivable (round to nearest day, if necessary): (Round to the nearest %.)

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Definitions:

Underapplied

A situation in cost accounting where the allocated indirect costs are less than the actual indirect costs incurred, resulting in a discrepancy.

Depreciation Expense

It represents the allocation of the cost of tangible assets over its useful life, reflecting the use and wear and tear of the asset.

Factory Equipment

This term describes the machinery and tools used in a manufacturing process to produce goods.

Overhead Cost

The ongoing expense of operating a business that is not directly attributed to a specific product or service, such as rent and utilities.