a. Explanation Accounts receivable turnover Accounts receivable turnover is a liquidity measure of accounts receivable in times, which is calculated by dividing the net credit sales by the average amount of net accounts receivables. In simple, it indicates the number of times the average amount of net accounts receivables has been collected during a particular period. Calculate accounts receivable turnover ratio for Company A. Accounts receivable turnover for Company A } = Sales Average account receivable = Sales ( Accounts receivable, beginning+ Accounts receivable, ending 2 ) = $ 135 , 987 ( $ 5 , 654 + $ 8 , 339 2 ) = 19.4 times Calculate accounts receivable turnover ratio for Incorporation B b. To determine Calculate the day’s sales in receivables of Company A and Incorporation B. c. To determine Evaluate the relative efficiency between Company A and Incorporation B in collecting accounts receivables. d. To determine Explain the possible reason for the difference in average accounts receivable turnover ratio for Incorporation B and Company A.

Financial and Managerial Accounting - CengageNow

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ISBN: 9781337911979

Author: WARREN

Publisher: CENGAGE L

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Question

Chapter 8, Problem 1MAD

To determine

Calculate the accounts receivable turnover of Company A and Incorporation B.

To determine

Calculate the day’s sales in receivables of Company A and Incorporation B.

To determine

Evaluate the relative efficiency between Company A and Incorporation B in collecting accounts receivables.

To determine

Explain the possible reason for the difference in average accounts receivable turnover ratio for Incorporation B and Company A.

Expert Solution & Answer

Chapter 8 Solutions

Financial and Managerial Accounting - CengageNow

Ch. 8 - What are the three classifications of receivables?Ch. 8 - Dans Hardware is a small hardware store in the...Ch. 8 - What kind of an account (asset, liability, etc.)...Ch. 8 - After the accounts are adjusted and closed at the...Ch. 8 - A firm has consistently adjusted its allowance...Ch. 8 - Which of the two methods of estimating...Ch. 8 - Neptune Company issued a note receivable to...Ch. 8 - If a note provides for payment of principal of...Ch. 8 - Prob. 9DQ Ch. 8 - Prob. 10DQ

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