Problems:(A) Understanding Receivables:ABC sells on credit terms of 2/10, n/30. Daily sales average 200 units at P2,500 each throughout the 365-day year. All salesare on credit. On average, 40% take the cash discount by paying on tenth day while the remaining 60% pay on the 30th day.It is planning to change the credit terms to 2/10, n/25. If this change was done, daily sales will be 180 units. Around 45% willpay on the tenth day while the remaining 55% will pay on the 25n day.1. What is the original average accounts receivable balance based on the given?2. What is the original average collection period of the receivables in days?3. What is the original receivable turnover? Round off to two decimal places.

Solution: Accounts receivable is defined as those customers who have purchased the goods or taken…

Answered: Problems: (A) Understanding…

Problems: (A) Understanding Receivables: ABC sells on credit terms of 2/1o, n/30. Daily sales average 200 units at P2,500 each throughout the 365-day year. All sales

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Net credit sales for Turner Company are $200,000 for the year and the average accounts receivable…

A: Average collection period = Accounts Receivable Turnover Ratio =

Q: Net credit sales for the month are $800 000. The accounts receivable is $160 000. The allowance is…

A: The Allowance for Doubtful Debts, also known as the Allowance for Bad Debts or Provision for…

Q: YZ's receivables turnover is 24x. The accounts receivable at year-end are $410,000. The average…

A: Account receivables are payment due to the customers that are not received yet and will be received…

Q: The Malibu Corporation has annual credit sales of $36 million. The average collection period is 38…

A: Day sales in receivables= 365/receivables turnover38 =365/ receivables turnoverreceivables turnover=…

Q: What is LoGo's payables deferral period (DPO)?

A: Payables deferral period (DPO) = Accounts payable/Credit purchases per day It is the number of days…

Q: Blackwell Co. has credit sales of $317,428, costs of goods sold of $151,217, and average accounts…

A: Days sales in outstanding is the number of days required to collect receivables from credit…

Q: Oman company had $180,000 sales on credit last year. The accounts receivable balance was $14,000…

A: Given: Credit sales = $180,000 Accounts receivables = $14,000

Q: A company reports the following: Sales $1,156, 320 Average accounts receivable (net) 87,600…

A: Lets understand the basics.Account receivable turnover ratio indicates number of times account…

Q: Please compute for the letter E to L requirements.

A: Hi Student, since there are multiple subparts, we will answer only three subparts. If you want…

Q: Accounts receivable management This table, shows that Blair Supply had an end-of-year accounts…

A: On a company's balance sheet, accounts receivable are categorized as a current asset because of its…

Q: average investment in accounts receivable?

A: Average investment in accounts receivable = Accounts receivable average collection period * Annual…

Q: ccounts Receivable Analysis: A company reports the following Sales $649,700 64,970 Average accounts…

A: Ratio analysis: It is a method used to measure the liquidity, profitability, efficiency of the…

Q: Dallas Pierce's most recent credit card statement follows. His finance charge is 18% APR. Calculate…

A: (Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Q: ABC sells on credit terms of 2/10, n/30. Daily sales average 200 units at P2,500 each throughout the…

A: ABC sells on credit terms of 2/10, n/30. Daily sales average = 200 units Sale price = P2500 each All…

Q: Assuming 77 percent of sales are on credit, what is the company's days' sales in receivables?

A: Information Provided: Net Income = $191,000 Profit Margin = 9.10% Accounts Receivable = $106,919…

Q: What is the number of days’ sales in receivables? Round to one decimal place. Group of answer…

A: Number of days' in receivables Days Sales Outstanding (DSO) represents the average number of days it…

Q: This year your company has $34 million of credit sales and average receivables of $7 million. Your…

A: APR signifies the complete expense of borrowing money for a year. It is expressed as a percentage of…

Q: Al Sharif Company's Average Accounts Receivables is OMR 360,000 and total Sales is OMR 1,200,000.…

A: Credit sale=Total sale×100-Cash sale %=OMR 1,200,000×100-40%=OMR 720,000

Q: A company reports the following: Line Item Description Amount Sales $5,250,000 Average…

A: The objective of the question is to calculate the accounts receivable turnover and the days' sales…

Q: accounts receivable turno ratio of a company is 2, annual credit sales IS $ nat is the average…

A: Given, Accounts receivable turnover = 2 Annual credit sales = $719550

Q: he following information relates to Zulu Company’s accounts receivable for 20X1:…

A: The question is based on the concept of Financial Accounting.

Q: Calculate the monthly finance charge for the credit card transaction. Assume that it takes 10 days…

A: Monthly finance charge on the credit card needs to be calculated under three different scenarios.…

Q: MULTIPLE CHOICE Milch Corporation sells on terms of net/90. Their accounts receivable are on…

A: The average investment in receivables can be estimated with the help of days sales outstanding…

Q: RUCTIONS Prepare one journal entry summarizing the recognition of uncolle expense for the entire…

A: The account receivable is displayed on the record with the approximation of calculable collectible…

Q: A company has the following information: Net credit sales = $400,000 Net income = $100,000 Average…

A: The ratio is the technique used by the prospective investor or an individual or strategist to read…

Q: Accounts receivable analysis A company reports the following: Sales Average accounts receivable…

A: (a) Accounts receivable turnover=sales/ Average accounts…

Q: Camden Hardware's credit sales for the year were $445,500. Accounts receivable at the beginning and…

A: ACCOUNT RECEIVABLE TURNOVER RATIOAccount Receivable Turnover Ratio is the Ratio between Net Sales…

Q: 7. Assuming a 365-day year, how long (in average days) does the collectibles from customers stay as…

A: In order to increase the sales revenue, the business entity sold the goods on a credit basis. Out of…

Q: La Resolana, S.A., has credit sales of $180,000 per year, with net payment terms of 30 days, which…

A: Accounts receivables are the current assets of the company which arises due to sale made on credit…

Q: A company reports the following: Line Item Description Amount Sales $235,060 Average accounts…

A: The account receivables turnover is calculated as net sales divided by average account…

Q: A company reports the following: Sales $1,460,000 Average accounts receivable (net) 100,000…

A: a. Accounts receivable turnover = Net sales / average accounts receivable Accounts receivable…

Q: None

A: Month 1Finance Charges = 4000 * 0.25 /12 = 83.33Balance after finance charges and purchases = 4000+…

Q: The Carhart Corporation sells on credit terms of net 25. Its accounts are, on average, 8 days past…

A: The amount of money that is owed to a company by its customers for products or services that have…

Q: (B) Receivables: Credit Terms: ABC sold boxes of candles at P1,000 each. Each box costs P750. Daily…

A: 10) Net Advantage or Disadvantage of the plan Income…

Q: Accounts receivable management This table, , shows that Blair Supply had an end-of-year accounts…

A: It is the time taken to convert the accounts receivable into cash. The lower the ratio, the company…

Q: Credit sales during the year were $425,000, the Allowance for Uncollectible Accounts had a beginning…

A: Uncollectibles = Credit Sale ×2%=$425,000×2%=$8,500

Q: ve costs of trade credit to International’s non-discount customers? (Hint: Calculate sales/day based…

Q: A recent annual report for Adobe Incorporated contained the following data: (dollars in thousands)…

A: Accounts Receivable: It refers to the amount that is yet to be collected by the business from the…

Q: The receivable tumover of Doris Co. for 2018 was 5 times with credit sales of P300,000. There are…

A: Formula: Receivable Turnover ratio = Net Credit sales / Average Accounts receivable

Q: Logan Sales provides the following information: Net credit sales: $770,000 Beginning net…

A: Net Credit Sales = $770,000 Beginning Accounts receivables = $45,000 Ending account receivables =…

Q: Sweetens Cove, Incorporated, has weekly credit sales of $69400 and the average collection period is…

A: Company’s receivables can be expressed as its average daily sales multiplied by its average…

Q: Fred's Factory has credit sales of $747,500 and an average accounts receivable balance of $57,500.…

A: Variables in the question:Credit sales=$747,500Average accounts receivable=$57,500Discount=2%=0.02

Q: Mariota's has annual sales of $539,200 and cost of goods sold of $350,480. The beginning accounts…

A: Average collection periods represent the average number of days taken to collect the receivables of…

Q: ibu Corporation has annual credit sales of $35 million. The s 37 days. What is the average…

A: The average accounts receivable represents the average amount of trade receivables on hand during a…

Q: Brief Exercises Identify different types of receivables. BE8.1 (LO 1), C The following are three…

A: Journal Entries - Journal Entries are records for the transactions entered into by the company. It…

Concept explainers

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.

Question

Problems:
(A) Understanding Receivables:
ABC sells on credit terms of 2/10, n/30. Daily sales average 200 units at P2,500 each throughout the 365-day year. All sales
are on credit. On average, 40% take the cash discount by paying on tenth day while the remaining 60% pay on the 30th day.
It is planning to change the credit terms to 2/10, n/25. If this change was done, daily sales will be 180 units. Around 45% will
pay on the tenth day while the remaining 55% will pay on the 25n day.
1. What is the original average accounts receivable balance based on the given?
2. What is the original average collection period of the receivables in days?
3. What is the original receivable turnover? Round off to two decimal places.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

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

Need answer the question
Need answer
A company has net income of $182,000, a profit margin of 9.90 percent, and an accounts receivable balance of $106,014. Assuming 69 percent of sales are on credit, what is the company's days' sales in receivables? Multiple Choice 21.05 days 40.40 days 30.50 days
Use the following information to answer the question that follow:Net Income : $205,000Profit margin : 7.80%A/R : $151,642Credit sales : 60% of total sales Compute the days’ sales in receivables
A company reports the following: Sales $1,332,250 Average accounts receivable (net) 53,290 Determine (a) the accounts receivable turnover and (b) the number of days' sales in receivables. Round interim calculations to the nearest dollar and final answers to one decimal place. Assume a 365-day year. a. Accounts receivable turnover fill in the blank 1 b. Number of days' sales in receivables fill in the blank 2 days
K Accounts receivable management This table, shows that Blair Supply had an end-of-year accounts receivable balance of $300,000. The table also shows how much of the receivables balance originated in each of the previous six months. The company had annual sales of $2.40 million and it normally extends 30-day credit terms to its customers. a. Use the year-end total to evaluate the firm's collection system. b. If 70% of the firm's sales occur between July and December, would this affect the validity of your conclusion in part a? Explain. a. The average collection period is days. (Round to two decimal places.)
Question no. 1: McDowell Industries sells on terms of 4/10, net 40. Total sales for the year are $825,500. Thirty percent of customers pay on the 15th day and take discounts; the other 70% pay, on average, 60 days after their purchases. What is the days sales outstanding? What is the average amount of receivables? What would happen to average receivables if McDowell toughened its collection policy with the result that all non-discount customers paid on the 40th day? Question no.2: International Industries sells on terms of 3/10, net 50. Gross sales last year were 5,662,500 and accounts receivable averaged 547,500. Half of International’s customers paid on the 15th day and took discounts. What are the nominal and effective costs of trade credit to International’s non-discount customers? (Hint: Calculate sales/day based on a 360-day year, then calculate average receivables of discount customers and then find the DSO for the non-discount customers. Question no.3: The D.J. Masson…
Vikram
Ben Corp has the following annual information: Receivable days assumption = 55 days Payable days assumption = 69 days Forecasted revenue = 263,500 Forecasted cost of goods sold = 114,780 Forecast the accounts receivables.
Determination of credit sales Mervyn’s Fine Fashions has an average collection period of 30 days. The accounts receivable balance is $78,000. What is the value of its credit sales?
Please Solve This Question 1. Medwing Corporation has a DSO of 19 days. The company averages 5,500 in credit sales each day. What is the company’s average accounts receivable?
hf.3