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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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![The president of Sheridan Enterprises asks if you could indicate the impact certain transactions have on the following ratios.
Complete the table, indicating whether each transaction will increase, decrease, or have no effect on the specific ratios provided for Sheridan Enterprises.
Transaction
1.
Received $7,300 on cash sale. The cost of the goods sold was $3,796
2.
Recorded bad debt expense of $730 using allowance method.
3.
Wrote off a $146 account receivable as uncollectible (Uses allowance method.)
4.
Recorded $3,650 sales on account. The cost of the goods sold was $2,190.
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Current Ratio
(2:1)
Accounts Receivable Turnover
(10X)
Average Collection Period
(36.5 days)](https://content.bartleby.com/qna-images/question/e428917a-86ab-4ae4-9768-87e25ad9f8d4/5266aab7-14e8-4185-8550-a0b3f371ad38/hqdlsvq_thumbnail.png)
Transcribed Image Text:The president of Sheridan Enterprises asks if you could indicate the impact certain transactions have on the following ratios.
Complete the table, indicating whether each transaction will increase, decrease, or have no effect on the specific ratios provided for Sheridan Enterprises.
Transaction
1.
Received $7,300 on cash sale. The cost of the goods sold was $3,796
2.
Recorded bad debt expense of $730 using allowance method.
3.
Wrote off a $146 account receivable as uncollectible (Uses allowance method.)
4.
Recorded $3,650 sales on account. The cost of the goods sold was $2,190.
Save for Later
Current Ratio
(2:1)
Accounts Receivable Turnover
(10X)
Average Collection Period
(36.5 days)
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- Action Signs recorded credit sales of $10,000 on the gross method. Terms are 2/20, n/30. How would the entry to this sale be recorded? cash decreases by $3,000 sales discounts increase by $200 sales increases by $9,800 accounts receivable increases by $10,000arrow_forwardM6-2 (Algo) Reporting Net Sales with Sales Discounts, Credit Card Discounts, and Sales Returns L06-1 Total gross sales for the period include the following: Credit card sales (discount 34) Sales on account (2/15, n/60) $10,000 $10,200 Sales returns related to sales on account were $250. All returns were made before payment. One-half of the remaining sales on account were paid within the discount period. The company treats all discounts and returns as contra-revenues. What amount will be reported on the income statement as net sales? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Answer is complete but not entirely correct. $ 19,950.00 Net salesarrow_forwardAccounts Receivable Analysis The following data are taken from the financial statements of Sigmon Inc. Terms of all sales are 2/10, n/45. 20Y3 20Υ2 20Υ1 Accounts receivable, end of year $127,800 $135,000 $142,400 Sales on account 775,260 748,980 a. For 20Y2 and 20Y3, determine (1) the accounts receivable turnover and (2) the number of days' sales in receivables. Round answers to one decimal place. Assume a 365-day year. 20Y3 20Υ2 1. Accounts receivable turnover 2. Number of days' sales in receivables days days b. The collection of accounts receivable has improved • v. This can be seen in both the increase V in accounts receivable turnover and the decrease V in the collection period.arrow_forward
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