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 collected during a particular period. Average collection period: Average collection period indicates the number of days taken by a business to collect its outstanding amount of accounts receivable on an average. To calculate: The accounts receivable turnover and average collection period for 2014 for Incorporation A.

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Answer 1

Question

Chapter 8, Problem 8.1EYCT

(a)

To determine

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 collected during a particular period.

Average collection period:

Average collection period indicates the number of days taken by a business to collect its outstanding amount of accounts receivable on an average.

To calculate: The accounts receivable turnover and average collection period for 2014 for Incorporation A.

(b)

To determine

To identify: whether Incorporation A has any potentially significant credit risks in 2014.

(c)

To determine

To conclude: The information from part (a) and (b).

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Suppose the following information was taken from the 2017 financial statements of FedEx Corporation, a major global transportation/delivery company. (in millions) 2017 2016 Accounts receivable (gross) $ 3,302 $ 4,396 Accounts receivable (net) 3,273 4,367 Allowance for doubtful accounts 29 29 Sales revenue 32,226 39,472 Total current assets 6,758 6,532 Answer each of the following questions. (a) Calculate the accounts receivable turnover and the average collection period for 2017 for FedEx Corporation. (Round answers to 1 decimal place, e.g. 12.5. Use 365 days for calculation.)

Gemstone Products located in New York City, is one of the world's largest producers of beauty and related products. The company's consolidated balance sheets for the 2016 and 2015 fiscal years included the following ($ in thousands): 2016 2015 Current assets: Receivables, less allowances of $131,720 in 2016 and $87,320 in 2015 $ 459,700 $ 440,400 A disclosure note accompanying the financial statements reported the following ($ in thousands) Year Ended 2016 (In thousands) 2015 (In thousands) Calculation of account receivables, net: Receivables $ 591,420 $ 527,720 Less: allowance for doubtful accounts (122,960) (77,660) Less: reserve for product returns (8,760) (9,660) Trade accounts receivable, net: $ 459,700 $ 440,400 Assume that the company reported bad debt expense in 2016 of $191,400 and had products returned for credit totaling $187,060 (sales price). Net sales for 2016 were $5,598,800 ($ in thousands). Required: What is the amount of…

Gemstone Products located in New York City, is one of the world's largest producers of beauty and related products. The company's consolidated balance sheets for the 2016 and 2015 fiscal years included the following ($ in thousands): 2016 2015 Current assets: Receivables, less allowances of $132,960 in2016 and $88,560 in 2015 $ 461,300 $ 441,200 A disclosure note accompanying the financial statements reported the following ($ in thousands) Year Ended 2016 2015 (In thousands) Calculation of account receivables, net: Receivables $ 594,260 $ 529,760 Less: allowance for doubtful accounts (123,080 ) (77,780 ) Less: reserve for product returns (9,880 ) (10,780 ) Trade accounts receivable, net: $ 461,300 $ 441,200 Assume that the company reported bad debt expense in 2016 of $192,200 and had products returned for credit totaling $187,180 (sales price). Net sales for…

Answer 2

Question

Chapter 8, Problem 8.1EYCT

(a)

To determine

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 collected during a particular period.

Average collection period:

Average collection period indicates the number of days taken by a business to collect its outstanding amount of accounts receivable on an average.

To calculate: The accounts receivable turnover and average collection period for 2014 for Incorporation A.

(b)

To determine

To identify: whether Incorporation A has any potentially significant credit risks in 2014.

(c)

To determine

To conclude: The information from part (a) and (b).

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Answer 3

Question

Chapter 8, Problem 8.1EYCT

(a)

To determine

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 collected during a particular period.

Average collection period:

Average collection period indicates the number of days taken by a business to collect its outstanding amount of accounts receivable on an average.

To calculate: The accounts receivable turnover and average collection period for 2014 for Incorporation A.

(b)

To determine

To identify: whether Incorporation A has any potentially significant credit risks in 2014.

(c)

To determine

To conclude: The information from part (a) and (b).

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Answer 4

Question

Chapter 8, Problem 8.1EYCT

(a)

To determine

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 collected during a particular period.

Average collection period:

Average collection period indicates the number of days taken by a business to collect its outstanding amount of accounts receivable on an average.

To calculate: The accounts receivable turnover and average collection period for 2014 for Incorporation A.

(b)

To determine

To identify: whether Incorporation A has any potentially significant credit risks in 2014.

(c)

To determine

To conclude: The information from part (a) and (b).

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Answer 5

Chapter 8, Problem 8.1EYCT

(a)

To determine

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 collected during a particular period.

Average collection period:

Average collection period indicates the number of days taken by a business to collect its outstanding amount of accounts receivable on an average.

To calculate: The accounts receivable turnover and average collection period for 2014 for Incorporation A.

(b)

To determine

To identify: whether Incorporation A has any potentially significant credit risks in 2014.

(c)

To determine

To conclude: The information from part (a) and (b).

Answer 6

Chapter 8, Problem 8.1EYCT

(a)

To determine

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 collected during a particular period.

Average collection period:

Average collection period indicates the number of days taken by a business to collect its outstanding amount of accounts receivable on an average.

To calculate: The accounts receivable turnover and average collection period for 2014 for Incorporation A.

Answer 7

Chapter 8, Problem 8.1EYCT

(a)

To determine

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 collected during a particular period.

Average collection period:

Average collection period indicates the number of days taken by a business to collect its outstanding amount of accounts receivable on an average.

To calculate: The accounts receivable turnover and average collection period for 2014 for Incorporation A.

Answer 8

(b)

To determine

To identify: whether Incorporation A has any potentially significant credit risks in 2014.

Answer 9

(b)

To determine

To identify: whether Incorporation A has any potentially significant credit risks in 2014.

Answer 10

(c)

To determine

To conclude: The information from part (a) and (b).

Answer 11

(c)

To determine

To conclude: The information from part (a) and (b).

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 8 - What is the difference between an account...Ch. 8 - What are some common types of receivables other...Ch. 8 - What are the essential features of the allowance...Ch. 8 - Prob. 4Q Ch. 8 - Prob. 5Q Ch. 8 - Prob. 6Q Ch. 8 - Prob. 7Q Ch. 8 - Tawnya Dobbs, the vice president of sales for...Ch. 8 - Prob. 9Q Ch. 8 - Prob. 10Q

Solution Summary: The author calculates the accounts receivable turnover and average collection period for Incorporation A.

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To identify: whether Incorporation A has any potentially significant credit risks in 2014.

To conclude: The information from part (a) and (b).

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