The following information has been extracted from the annual reports of Lilydale Ltd andMonbulk Ltd.Lilydale LtdMonbulk Ltd$2 950 30017 100Sales (net credit) revenue for yearAllowance for Doubtful Debts, 1/7/18Allowance for Doubtful Debts, 30/6/19Accounts receivable (gross) 1/7/18Accounts receivable (gross) 30/6/19$2 204 30027 1001978028 100722 650368 000485 800384 200(a) Calculate the receivables turnover ratio and average collection period for both companies.Comment on the difference in their collection experiences.(b) Compare the success or otherwise of their cash collection policies, given that the averagereceivables turnover for the industry in which the companies operated is 7. Credit terms forboth companies are 2/10, n/30.

Concepts Receivable Turnover Ratio indicate that, how many time sales are made and collection did…

nbulk Ltd. Lilydale Ltd Monbulk $2 950 300 17 100 ales (net credit) revenue for year llowance for Doubtful Debts, 1/7/18 llowance for Doubtful Debts, 30/6/19 ccounts receivable (gross) 1/7/18 ccounts receivable (gross) 30/6/19 $2 204 30 27 10 19780 28 10 722 650 368 00 485 800 384 20

nbulk Ltd. Lilydale Ltd Monbulk $2 950 300 17 100 ales (net credit) revenue for year llowance for Doubtful Debts, 1/7/18 llowance for Doubtful Debts, 30/6/19 ccounts receivable (gross) 1/7/18 ccounts receivable (gross) 30/6/19 $2 204 30 27 10 19780 28 10 722 650 368 00 485 800 384 20

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter6: Business Expenses

Section: Chapter Questions

Problem 44P

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Question

The following information has been extracted from the annual reports of Lilydale Ltd and
Monbulk Ltd.
Lilydale Ltd
Monbulk Ltd
$2 950 300
17 100
Sales (net credit) revenue for year
Allowance for Doubtful Debts, 1/7/18
Allowance for Doubtful Debts, 30/6/19
Accounts receivable (gross) 1/7/18
Accounts receivable (gross) 30/6/19
$2 204 300
27 100
19780
28 100
722 650
368 000
485 800
384 200
(a) Calculate the receivables turnover ratio and average collection period for both companies.
Comment on the difference in their collection experiences.
(b) Compare the success or otherwise of their cash collection policies, given that the average
receivables turnover for the industry in which the companies operated is 7. Credit terms for
both companies are 2/10, n/30.

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