Answered: What are the key points arising from…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 6MC: Prior to adjustments, Barrett Companys account balances at December 31, 2019, for Accounts...

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Question

Princeton's detailed age analysis of trade receivables at 31 December 2020 shows the following:

Customer name	Total outstanding £	Credit limit £	0-30 days £	31-60 days £	61-90 days £	Over 90 days £
A. Ames	16200	15000	2000	8700	2500	3000
B.Bristow	18300	25000	18300	-	-	-
C.Chen	4700	4800	-	2000	2700	-
TOTAL	39200	-	20300	10700	5200	3000

Notes:
• The company offers 30 days credit to its customers.
• The credit is offered to the customers based on words of mouth
• Ames is disputing the quality of some of the goods and refusing to pay, no decision has
been made yet (£3,000 over 90 days)
• Chen has just put in an order for £5,000, he is a good friend of the director
Required:
What are the key points arising from the credit controller's review in respect of each trade
receivable balance and what suggestions can be made to improve the aged analysis report?

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