AN Jensen Company's general ledger included the following selected accounts (in thousands) at December 31, 2021: Accounts payable $1,077.3 Accounts receivable 590.4 Accumulated depreciation—equipment 858.7 Allowance for doubtful accounts 35.4 Bad debt expense 91.3 Cash 395.6 Cost of goods sold 660.4 Equipment 1,732.8 Interest revenue 19.7 Merchandise inventory 630.9 Notes receivable—due in 2022 96.0 Notes receivable—due in 2025 191.1 Prepaid expenses 20.1 Sales 4,565.5 Sales discounts 31.3 Short-term investments 194.9 Supplies 21.7 Unearned revenue 56.3 Additional information: 1.On December 31, 2020, Accounts Receivable was $611.1 thousand and the Allowance for Doubtful Accounts was $36.6 thousand. 2.The receivables turnover was 8.3 the previous year. Instructions a. Prepare the assets section of the balance sheet. b. Calculate the receivables turnover and average collection period. Compare these results with the previous year's results and comment on any trends
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
AN Jensen Company's general ledger included the following selected accounts (in thousands) at December 31, 2021:
Accounts payable
$1,077.3
Accounts receivable
590.4
858.7
Allowance for doubtful accounts
35.4
91.3
Cash
395.6
Cost of goods sold
660.4
Equipment
1,732.8
Interest revenue
19.7
Merchandise inventory
630.9
Notes receivable—due in 2022
96.0
Notes receivable—due in 2025
191.1
Prepaid expenses
20.1
Sales
4,565.5
Sales discounts
31.3
Short-term investments
194.9
Supplies
21.7
Unearned revenue
56.3
Additional information:
1.On December 31, 2020, Accounts Receivable was $611.1 thousand and the Allowance for Doubtful Accounts was $36.6 thousand.
2.The receivables turnover was 8.3 the previous year.
Instructions
a.
Prepare the assets section of the balance sheet.
b.
Calculate the receivables turnover and average collection period. Compare these results with the previous year's results and comment on any trends
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