Financial Accounting-w/cd-package
3rd Edition
ISBN: 9780131060876
Author: REIMERS
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 4, Problem 1FSA
1.
To determine
Identify whether Company HP had credit sales; if so provide its evidence.
2.
To determine
Calculate the accounts receivable turnover ratio and also explain about the Company HP’s credit and collection policies.
3.
To determine
Explain the type of
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Create a ledger of Account Receivable and ledger of AFDD to find the bad debt by using this information;
Alpha Company's accounts receivable and allowance for doubtful accounts balances were RM100000 and RM14000 (credit) respectively, at the beginning of 2012. During 2012, a customer defaults on a RM12000 balance related to goods purchased during 2011. By the end of the year, the company had mad credit sales of RM2400000 and collected RM2200000 on account. Estimates 1 percent of its credit sales will default.
a) Calculate Kopitiam Sdn Bud’s accounts receivable turnover ratio for Year 2
and Year 3.
b) Calculate the number of days the average balance of receivables is outstanding before being converted into cash (turnover in days) for Year 2 and Year 3
c) What problem do you see with the company’s credit policy if the terms are net 30
days? Explain your answer.
ed
Softee Sodas and Patterson Beverage Company are two of the largest and most successful beverage companies in the world in terms
of the products that they sell and their receivables management practices. To evaluate their ability to collect on credit sales, consider
the following rounded amounts reported in their annual reports (amounts in millions).
Fiscal Year Ended:
Net Sales
Accounts Receivable
Allowance for Doubtful Accounts
Accounts Receivable, Net of Allowance
2018
$ 35,660
4,130
550
3,580
Softee Sodas
2017
$ 39,520
4,390
540
3,850
Patterson Beverage Company
2016
$ 44,440
4,580
530
4,050
2018
$ 71,440
7,680
100
7,580
2017
$ 72,120
7,590
130
2016
$ 66,660
7,250
140
7,460
7,110
Required:
1. Calculate the receivables turnover ratios and days to collect for Softee Sodas and Patterson Beverage Company for 2018 and 2017.
2-a. Which of the companies was quicker to convert its receivables into cash in 2018?
2-b. Which of the companies was quicker to convert its receivables into cash…
Chapter 4 Solutions
Financial Accounting-w/cd-package
Ch. 4 - Prob. 1YTCh. 4 - Prob. 2YTCh. 4 - Suppose at the end of the year Pendleton Corp.s...Ch. 4 - Prob. 4YTCh. 4 - Prob. 5YTCh. 4 - Prob. 6YTCh. 4 - Prob. 7YTCh. 4 - Prob. 1QCh. 4 - Prob. 2QCh. 4 - Prob. 3Q
Ch. 4 - Prob. 4QCh. 4 - What does true cash balance refer to?Ch. 4 - Identify and explain the financial statements on...Ch. 4 - Describe how accounts receivable arise. What does...Ch. 4 - Prob. 8QCh. 4 - Define net realizable value, book value, and...Ch. 4 - Explain the difference between the direct...Ch. 4 - If a company uses the allowance method of...Ch. 4 - Describe the two allowance methods used to...Ch. 4 - Which method of calculating the allowance for...Ch. 4 - Which method of calculating the allowance for...Ch. 4 - What are the advantages and disadvantages of...Ch. 4 - What is the difference between accounts receivable...Ch. 4 - What is the formula to calculate the accounts...Ch. 4 - How does a firm use its accounts receivable...Ch. 4 - Prob. 19QCh. 4 - Prob. 20QCh. 4 - Prob. 1MCQCh. 4 - Prob. 2MCQCh. 4 - Prob. 3MCQCh. 4 - Prob. 4MCQCh. 4 - Prob. 5MCQCh. 4 - Prob. 6MCQCh. 4 - Prob. 7MCQCh. 4 - Prob. 8MCQCh. 4 - Prob. 9MCQCh. 4 - Prob. 1SEACh. 4 - Prob. 2SEACh. 4 - Prob. 3SEACh. 4 - Prob. 4SEACh. 4 - Prob. 5SEACh. 4 - Prob. 6SEACh. 4 - Prob. 7SEACh. 4 - Prob. 8SEACh. 4 - Prob. 9SEACh. 4 - Prob. 10SEBCh. 4 - Prob. 11SEBCh. 4 - Prob. 12SEBCh. 4 - Prob. 13SEBCh. 4 - Prob. 14SEBCh. 4 - Prob. 15SEBCh. 4 - Prob. 16SEBCh. 4 - Prob. 17SEBCh. 4 - Prob. 18SEBCh. 4 - Prob. 19EACh. 4 - Prob. 20EACh. 4 - Prob. 21EACh. 4 - Prob. 22EACh. 4 - Prob. 23EACh. 4 - Prob. 24EACh. 4 - Prob. 25EACh. 4 - Prob. 26EACh. 4 - Prob. 27EACh. 4 - Prob. 28EACh. 4 - Prob. 29EACh. 4 - Prob. 30EACh. 4 - Prob. 31EACh. 4 - Prob. 32EBCh. 4 - Prob. 33EBCh. 4 - Prob. 34EBCh. 4 - Prob. 35EBCh. 4 - Prob. 36EBCh. 4 - Prob. 37EBCh. 4 - Prob. 38EBCh. 4 - Prob. 39EBCh. 4 - Prob. 40EBCh. 4 - Prob. 41EBCh. 4 - Prob. 42EBCh. 4 - Prob. 43EBCh. 4 - Prob. 44EBCh. 4 - Prob. 45PACh. 4 - Prob. 46PACh. 4 - Prob. 47PACh. 4 - Prob. 48PACh. 4 - Prob. 49PACh. 4 - Prob. 50PACh. 4 - Prob. 51PACh. 4 - Prob. 52PACh. 4 - Prob. 53PBCh. 4 - Prob. 54PBCh. 4 - Prob. 55PBCh. 4 - Prob. 56PBCh. 4 - Prob. 57PBCh. 4 - Prob. 58PBCh. 4 - Prob. 59PBCh. 4 - Prob. 60PBCh. 4 - Prob. 1FSACh. 4 - Prob. 2FSACh. 4 - The following information has been adapted from...Ch. 4 - Prob. 1CTPCh. 4 - Prob. 2CTPCh. 4 - The information given here was taken from Yahoo!...Ch. 4 - Prob. 1IECh. 4 - Prob. 2IECh. 4 - The information given here was taken from Yahoo!...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- What information can best be elicited from a receivable ratio? A. company performance with current debt collection B. credit extension effect on cash sales C. likelihood of future customer bankruptcy filings D. an increase in future credit sales to current customersarrow_forwardShimmer Products is considering which bad debt estimation method works best for its company. It is deciding between the income statement method, balance sheet method of receivables, and balance sheet aging of receivables method. If it uses the income statement method, bad debt would be estimated at 5.6% of credit sales. If it were to use the balance sheet method, it would estimate bad debt at 13.7% percent of accounts receivable. If it were to use the balance sheet aging of receivables method, it would split its receivables into three categories: 0–30 days past due at 5%, 31–90 days past due at 21%, and over 90 days past due at 30%. There is currently a zero balance, transferred from the prior years Allowance for Doubtful Accounts. The following information is available from the year-end income statement and balance sheet. There is also additional information regarding the distribution of accounts receivable by age. Prepare the year-end adjusting entry for bad debt, using A. Income statement method B. Balance sheet method of receivables C. Balance sheet aging of receivables method D. Which method should the company choose, and why?arrow_forwardIn 2013, Coca-Cola had a receivables turnover ratio of9.3. Which of the following actions could Coca-Cola taketo cause the ratio to increase?a. Pursue collections more aggressively.b. Increase the percentages used to estimate bad debts.c. Factor its receivables.d. All of the above.arrow_forward
- Use the following financial statement information from Black Water Industries. BLACK WATER INDUSTRIES Ending Accounts Receivable Year Net Credit Sales 2017 $690,430 $335,250 2018 705,290 364,450 2019 770,500 406,650 A. Compute the accounts receivable turnover ratios for 2018 and 2019. Round your answers to two decimal places. 2018 times 2019 times B. Using the accounts receivable turnover, choose the statement that most closely describes the company's management of its receivables. a. The company's lending policies may be too strict. b. Collection efforts are not aggressive enough. There may be uncollectable receivables affecting the beginning and ending C. balances. d. All of the above statements may be correct. a b darrow_forwardThe following data are for Rocky Company. Accounts receivable, net Net sales Current Year $ 153,400 861,105 1 Year Ago $ 138,500 910, 600 (a) Compute Rocky's accounts receivable turnover. (b) If its competitor, Dixon, has an accounts receivable turnover of 7.5, which company appears to be doing a better job of managing its receivables?arrow_forwardFizzy Sodas and Hayes Companies are two of the largest and most successful beverage companies in the world in terms of the products that they sell and their receivables management practices. To evaluate their ability to collect on credit sales, consider the following rounded amounts reported in their annual reports (amounts in millions). Fiscal Year Ended: Net Sales Accounts Receivable Allowance for Doubtful Accounts Accounts Receivable, Net of Allowance Req 1 Complete this question by entering your answers in the tabs below. Req 2A Required: 1. Calculate the receivables turnover ratios and days to collect for Fizzy Sodas and Hayes Companies for 2018 and 2017. 2-a. Which of the companies was quicker to convert its receivables into cash in 2018? 2-b. Which of the companies was quicker to convert its receivables into cash in 2017? Req 2B Receivables Turnover Ratio Days to collect 2018 2018 $ 40,630 4,410 620 3,790 Fizzy Sodas Fizzy Sodas 2017 $ 45,120 4,710 610 4,100 Hayes Companies…arrow_forward
- Which one of the following statements concerning bad debt expenses is correct? Select one: a. When you write off an accounts receivable, you debit bad debt expense and credit accounts receivable. b. You record bad debt expense when individual accounts receivable becomes uncollectible. c. Under the percentage of receivables method, bad debt expense is the year-end receivables multiplied by the % of uncollectible accounts. d. When the allowance method is used, bad debt expense is recorded before the accounts are written off.arrow_forwardUse the data in Exercises 9-27 and 9-28 to analyze the accounts receivable turnover ratios of the Campbell Soup Company and American Eagle Outfitters, Inc.a. Compute the average accounts receivable turnover ratio for Campbell Soup and American Eagle for the years shown in Exercises 9-27 (See attachment) and 9-28 (See attachment).b. Does Campbelll Soup or American Eagle have the higher average accounts receivable turnover ratio?c. Explain why the average turnover ratios are different in (b).arrow_forwardRecord the write off for bad debts based on the this information: Alpha Company's accounts receivable and allowance for doubtful accounts balances were RM100000 and RM14000 (credit) respectively, at the beginning of 2012. During 2012, a customer defaults on a RM12000 balance related to goods purchased during 2011. By the end of the year, the company had mad credit sales of RM2400000 and collected RM2200000 on account. Estimates 1 percent of its credit sales will default.arrow_forward
- Use the following information to answer the next two questions: Lewis Company uses the allowance method for recording its expected credit losses. It estimates bad debts at 2% of credit sales, which were $900,000 during the year. On December 31, the Accounts Receivable balance was $150,000, and the Allowance for Doubtful Accounts had a balance of $12,200 before adjustments. What is the amount of bad debt expense Lewis Company will report on their Income Statement this year? Select one: a. 17,756 b. 3,000 c. 12,200 d. 18,000 e. 2,756arrow_forwardCoca-Cola and PepsiCo are two of the largest and most successful beverage companies in the world in terms of the products that they sell and their receivables management practices. To evaluate their ability to collect on credit sales, consider the following rounded amounts reported in their annual reports (amounts in millions). Fiscal Year Ended: Net Sales Accounts Receivable Allowance for Doubtful Accounts Accounts Receivable, Net of Allowance Req 1 Req 2A Required: 1. Calculate the receivables turnover ratios and days to collect for Coca-Cola and PepsiCo for 2018 and 2017. 2-a. Which of the companies was quicker to convert its receivables into cash in 2018? 2-b. Which of the companies was quicker to convert its receivables into cash in 2017? Complete this question by entering your answers in the tabs below. Receivables Turnover Ratio Days to collect Req 2B X Answer is complete but not entirely correct. Coca-Cola 2018 $ 31,860 3,890 490 3,400 2018 8.7 x 41.6 PepsiCo Coca-Cola 2017 9.0…arrow_forwardes Fizzy Sodas and Hayes Companies are two of the largest and most successful beverage companies in the world in terms of the products that they sell and their receivables management practices. To evaluate their ability to collect on credit sales, consider the following rounded amounts reported in their annual reports (amounts in millions). Fiscal Year Ended: Net Sales Accounts Receivable Allowance for Doubtful Accounts Accounts Receivable, Net of Allowance 2018 $ 40,630 4,410 620 3,790 Fizzy Sodas 2017 $ 45,120 4,710 610 4,100 2016 $ 47,640 4,930 600 4,330 2018 $ 82,416 8,240 100 8,140 Hayes Companies 2017 $82,945 8,150 130 8,020 Required: 1. Calculate the receivables turnover ratios and days to collect for Fizzy Sodas and Hayes Companies for 2018 and 2017. 2-a. Which of the companies was quicker to convert its receivables into cash in 2018? 2-b. Which of the companies was quicker to convert its receivables into cash in 2017? 2016 $ 71,470 7,770 140 7,630arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Financial ratio analysis; Author: The Finance Storyteller;https://www.youtube.com/watch?v=MTq7HuvoGck;License: Standard Youtube License