An auditor’s preliminary analysis of accounts receivable turnover revealed thefollowing rates over these accounting periods2013 2012 20114.3 6.2 7.3Which of the following is the most likely cause of the decrease in accounts receivableturnover?(1) Increase in the cash discount offered(2) Liberalization of credit policy(3) Shortening of due date terms(4) Increased cash sales

An auditor’s preliminary analysis of accounts receivable turnover revealed thefollowing rates over these accounting periods2013 2012 20114.3 6.2 7.3Which of the following is the most likely cause of the decrease in accounts receivableturnover?(1) Increase in the cash discount offered(2) Liberalization of credit policy(3) Shortening of due date terms(4) Increased cash sales

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter10: Auditing Cash, Marketable Securities, And Complex Financial Instruments

Section: Chapter Questions

Problem 13RQSC

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Dongguk Industry began the accounting year of 2010 with accounts receivable balance of $650,000 and a balance in the allowance for doubtful accounts (bad debts) of $19,500. During 2010, credit sales totaled $7,290,000 and cash collected from customers totaled $7,500,000. Actual write-offs of specific accounts receivable in 2010 were $19,000, as this amount turned out to be finally uncollectible. At the end of the year, an accounts receivable analysis, using the percentage of accounts receivable method (aging method), indicated a required (desired) allowance for doubtful accounts balance of $12,600. No accounts receivable previously written off were collected. Required: 1. Provide relevant journal entries to record the transactions during 2010 (including credit sales, cash collection from customers, and write-off of uncollectible accounts receivable). 2. Provide an (adjusting) entry to record bad debt expense at the end of 2010. 3. What is the net realizable value(net book…
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