Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Textbook Question
Chapter 9, Problem 9.11P
| (in millions) | 2016 | 2015 |
| Net sales | $13,014 | $13,525 |
| Accounts receivable, net | 1,231 | 1,344 |
| Total assets | 15,111 | 15,251 |
Source Kellogg Company Annual Report, December 2016 http//investor.kelloggs.com/~/media/Files/K/Kellogg-IR/Annual%20Reports/kellogg-2016-ar-10-k.PDF
Required
- a. How is the carrying value of accounts receivable determined?
- b. What factors influence management's judgment in its estimate of the amount of collectible receivables'?
- c. What is the percent of trade receivables to total assets at the end of 2016 and 2015?
- d. What is the percent of the allowance for uncollectible accounts to total trade receivables in 2016 and 2015? (See Note 19 in 2016 Annual Report)
- e. What were Kellogg's write-offs of accounts receivable in 2016 and 2015? (See Note 19 in 2016 Annual Report)
SUPPLEMENTAL FINANCIAL STATEMENT DATA
| Consolidated |
2016 | 2015 |
| Trade receivables | $ 1,106 | $1,169 |
| Allowance for doubtful accounts | (8) | (8) |
| Refundable income taxes | 24 | 27 |
| Other receivables | 109 | 156 |
| Accounts receivable, net | $ 1.231 | $1,344 |
| Allowance for doubtful accounts (millions) | 2016 | 2015 | 2014 |
| Balance at beginning of year | $ 8 | $ 7 | $ 5 |
| Additions charged to expense | 9 | 4 | 6 |
| Doubtful accounts charged to reserve | (9) | (3) | (4) |
| Balance at end of year | $ 8 | $ 8 | $ 7 |
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se the following selected financial statement information from Black Water Industries.
BLACK WATER INDUSTRIES
Year
Net Credit Sales
Ending Accounts
Receivable
2017
$687,430
$332,250
2018
705,290
362,450
2019
769,500
403,650
A. Compute the number of days’ sales in receivables ratios for 2018 and 2019. Round your answers to two decimal places.
2018 fill in the blank 1 days
2019 fill in the blank 2 days
B. Using the sales in accounts receivable, choose the statement that most closely describes the company's management of its receivables.
a.
The company collects its accounts slowly, and the days are increasing.
b.
This may be leave the company unable to pay current debt owed to a lender.
c.
The company may need to be more aggressive with its receivable collection procedures.
d.
All of the above statements may be correct.
The following select financial statement information from Candid Photography. CANDID PHOTOGRAPHY Year Net Credit Sales Ending Accounts Receivable
2017 net credit sales $2,988,000 accounts recievable $1,293,450
2018 net credit sales 3,756,860 accounts recievable 1,348,600
2019 net credit sales 4,001,350 accounts recievable 1,546,550
A. Compute the accounts receivable turnover ratios and the number of days’ sales in receivables ratios for 2018 and 2019. Round your answers to two decimal places.
B. What do the outcomes tell a potential investor about Candid Photography if industry average for accounts receivable turnover ratio is 3 times and days’ sales in receivables ratio is 150 days?
a.
Candid collects its accounts more quickly than its competitors.
b.
A lender may favour Candid over its competitors because of its faster collection period.
c.
Past data suggests that the collection period is increasing from 2018 to 2019, which is something that might concern an investor if…
Please help me with show all calculation thanku
Chapter 9 Solutions
Intermediate Accounting (2nd Edition)
Ch. 9 - Prob. 9.1QCh. 9 - Do companies always classify cash as a current...Ch. 9 - Prob. 9.3QCh. 9 - Do accountants typically measure accounts...Ch. 9 - Under the allowance method, will the actual...Ch. 9 - How does an entity record a subsequent recovery of...Ch. 9 - Does the aging of accounts receivable method of...Ch. 9 - What is the difference between pledging accounts...Ch. 9 - How do companies account for receivables that are...Ch. 9 - Is the face value of a note receivable exchanged...
Ch. 9 - What do firms use to record the sales value of a...Ch. 9 - Explain why a company must have highly effective...Ch. 9 - The following are held by YRT Corporation at...Ch. 9 - Fernandez Company had an accounts receivable...Ch. 9 - On its December 31, Year 2, balance sheet, Red...Ch. 9 - Stanberry Company sold 500,000 of net accounts...Ch. 9 - On November 30, Year 1, Derin Corporation agreed...Ch. 9 - Which of the following disclosures about accounts...Ch. 9 - Prob. 9.1BECh. 9 - Prob. 9.2BECh. 9 - Prob. 9.3BECh. 9 - Prob. 9.4BECh. 9 - Prob. 9.5BECh. 9 - Sales Discounts, Most-Likely-Amount Method. On...Ch. 9 - Allowance for Uncollectible Accounts, Write-Off....Ch. 9 - Allowance for Uncollectible Accounts, Write-Off....Ch. 9 - Allowance for Uncollectible Accounts, Recovery....Ch. 9 - Bad Debt Expense, Journal Entry. Paul Anchor...Ch. 9 - Bad Debt Expense. Journal Entry. Paul Anchor,...Ch. 9 - Bad Debt Expense, Aging of Accounts Receivable,...Ch. 9 - Bad Debt Expense, Aging of Accounts Receivable,...Ch. 9 - Prob. 9.14BECh. 9 - Prob. 9.15BECh. 9 - Assigned Receivables. Using the information...Ch. 9 - Factoring Receivables without Recourse. Nicks...Ch. 9 - Prob. 9.18BECh. 9 - Notes Receivable. Welk Associates sold a piece of...Ch. 9 - Prob. 9.20BECh. 9 - Prob. 9.21BECh. 9 - Prob. 9.22BECh. 9 - Internal Controls. Identify whether the following...Ch. 9 - Prob. 9.24BECh. 9 - Prob. 9.25BECh. 9 - Prob. 9.26BECh. 9 - Prob. 9.27BECh. 9 - Prob. 9.28BECh. 9 - Prob. 9.1ECh. 9 - Volume Discounts, Sales Discounts. Sodesta Company...Ch. 9 - Allowance for Uncollectible Accounts, Journal...Ch. 9 - Bad Debt Expense, Aging of Accounts Receivable....Ch. 9 - Bad Debt Expense, Write-Offs, Journal Entry....Ch. 9 - Bad Debt Expense, Aging of Accounts Receivable,...Ch. 9 - Bad Debt Expense, Aging of Accounts Receivable,...Ch. 9 - Bad Debt Expense, Percentage of Accounts...Ch. 9 - Prob. 9.9ECh. 9 - Assigning Receivables, Factoring Receivables....Ch. 9 - Prob. 9.11ECh. 9 - Factoring Receivables with and without Recourse....Ch. 9 - Factoring Receivables without Recourse, Factoring...Ch. 9 - Prob. 9.14ECh. 9 - Prob. 9.15ECh. 9 - Notes Receivable with Year-End Interest Accrual,...Ch. 9 - Prob. 9.18ECh. 9 - Allowance for Uncollectible Accounts, Journal...Ch. 9 - Prob. 9.2PCh. 9 - Allowance for Uncollectible Accounts, Aging of...Ch. 9 - Prob. 9.4PCh. 9 - Bad Debt Expense, Aging of Accounts Receivable....Ch. 9 - Bad Debt Expense, Aging of Accounts Receivable,...Ch. 9 - Prob. 9.7PCh. 9 - Prob. 9.8PCh. 9 - Aging of Accounts Receivable, Write-Offs,...Ch. 9 - Disclosure. Using the transactions listed in P9-9,...Ch. 9 - Accounts Receivable Disclosure. Using Kellogg...Ch. 9 - Prob. 1JCCh. 9 - Financial Statement Analysis Case: Revlon The...Ch. 9 - Prob. 1SSCCh. 9 - Surfing the Standards Case 2: Costs Associated...Ch. 9 - Prob. 1BCC
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