Answered: 5. Blige Corporation had sales revenue…

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

5.
Blige Corporation had sales revenue of $12,000,000 in 2019 and
$15,000,000 in 2020. Accounts receivable were $1,800,000 at the end of
2019 and $2,000,000 at the end of 2020.
Required
(a)
Calculate the accounts receivable turnover ratio for 2019 and 2020.
(b)
Has the management of accounts receivable improved or worsened
from 2019 to 2020?
(c)
What are the advantages and disadvantages of selling goods on
credit?
(d)
How much cash did Blige Corporation collect from its customers in
2020?
(e)
If sales in 2021 were expected to be $22,500,000, what would you
expect accounts receivable to be at the end of 2021?
Does a major increase in accounts receivable create

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