Accounting
27th Edition
ISBN: 9781337272094
Author: WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher: Cengage Learning,
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 9.7CP
(1)
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 has been collected during a particular period.
To calculate: The accounts receivable turnover for Year 2 and Year 1.
(2)
To determine
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 day’s sales in receivables at the end of Year 2 and Year 1.
(3)
To determine
To conclude: The Efficiency of Incorporation A’s management in collecting accounts receivables.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Apple Inc. designs, manufactures, and markets personal computers and related personal
computing and communicating solutions for sale primarily to education, creative, consumer,
and business customers. Substantially all of the company's sales over the last five years
are from sales of its Macs, iPods, iPads, and related software and peripherals. For two
recent fiscal years, Apple reported the following (in millions):
Year 2
Year 1
Sales
$233,715
$182,795
Accounts receivable at end of year
35,889
31,537
Assume that the accounts receivable (in millions) were $24,094 at the beginning of
fiscal Year 1.
1. Compute the accounts receivable turnover for Year 2 and Year 1. Round to two decimal
places.
2. Compute the days' sales in receivables at the end of Year 2 and Year 1. Use 365 days
and round to one decimal place.
What conclusions can be drawn from (1) and (2) regarding Apple's efficiency
3.
in collecting receivables?
Required information
Annie's Homemade Ice Cream provided the following data for this year:
Sales
Net operating income
Average operating assets
Required:
Consider each question below Independently. Carry out all computations to two decimal places.
$ 300,000
$ 54,000
$ 187,500
1. Compute the company's margin, turnover, and return on Investment (ROI) for this year.
2. The company is considering buying some billboard advertising with the expectation it would grow next year's sales and net
operating Income by $50,000 and $20,000, respectively. If this plan is Implemented, what would become next year's margin,
turnover, and ROI?
3. The company is considering buying a second cargo trailer and mobile cold plate push cart to expand its mobile sales. If the
company Implements this plan, It expects next year's sales, net operating Income and average operating assets to Increase by
$80,000, $30,000, and $10,000, respectively. What would become next year's margin, turnover, and ROI?
Complete this…
Rotorua Products sells agricultural products in the burgeoning Asian market. The company's current assets, current liabilities, and sales
over the last five years (Year 5 is the most recent year) are as follows:
Sales
Cash
Accounts receivable, net
Inventory
Total current assets
Current liabilities
Sales
Current assets:
Cash
Accounts receivable, net
Inventory
Total current assets
Current liabilities
Year 1
100.0
Year 1
$ 4,513,330
$ 86,858
414,137
805,814
$ 1,306,809
100.0
100.0
100.0
100.0
100.0
%
Required:
1. Express all of the asset, liability, and sales data in trend percentages. Use Year 1 as the base year.
Note: Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).
%
%
Year 2
$ 4,867,400
$ 97,107
423,798
880,974
$ 1,401,879
$ 318,689 $ 335,942
%
%
%
X Answer is not complete.
Year 2
Year 3
$ 5,101,490
$ 88,212
447,360
824,047
$ 1,359,619
$ 324,994
%
%
%
%
%
%
Year 3
%
%
%
%
Year 5
Year 4
$5,485,330 $ 5,648,040
%
%
$ 91,910
507,318
894,402
$…
Chapter 9 Solutions
Accounting
Ch. 9 - What are the three classifications of receivables?Ch. 9 - Dans Hardware is a small hardware store in the...Ch. 9 - What kind of an account (asset, liability, etc.)...Ch. 9 - After the accounts are adjusted and closed at the...Ch. 9 - A firm has consistently adjusted its allowance...Ch. 9 - Which of the two methods of estimating...Ch. 9 - Neptune Company issued a note receivable to...Ch. 9 - If a note provides for payment of principal of...Ch. 9 - The maker of a 240,000, 6%, 90-day note receivable...Ch. 9 - The note receivable dishonored in Discussion...
Ch. 9 - Direct write-off method Journalize the following...Ch. 9 - Direct write-off method Journalize the following...Ch. 9 - Allowance method Journalize the following...Ch. 9 - Allowance method Journalize the following...Ch. 9 - Percent of sales method At the end of the current...Ch. 9 - Percent of sales method At the end of the current...Ch. 9 - Analysis of receivables method At the end of the...Ch. 9 - Analysis of receivables method At the end of the...Ch. 9 - Note receivable Lundquist Company received a...Ch. 9 - Note receivable Prefix Supply Company received a...Ch. 9 - Accounts receivable turnover and days sales in...Ch. 9 - Accounts receivable turnover and days sales in...Ch. 9 - Classifications of receivables Boeing is one of...Ch. 9 - Nature of uncollectible accounts MGM Resorts...Ch. 9 - Entries for uncollectible accounts, using direct...Ch. 9 - Entries for uncollectible receivables, using...Ch. 9 - Entries to write off accounts receivable Quantum...Ch. 9 - Providing for doubtful accounts At the end of the...Ch. 9 - Number of days past due Toot Auto Supply...Ch. 9 - Aging of receivables schedule The accounts...Ch. 9 - Estimating allowance for doubtful accounts...Ch. 9 - Adjustment for uncollectible account Using data in...Ch. 9 - Estimating doubtful accounts Performance Bike Co....Ch. 9 - Entry for uncollectible accounts Using the data in...Ch. 9 - Entries for bad debt expense under the direct...Ch. 9 - Entries for bad debt expense under the direct...Ch. 9 - Effect of doubtful accounts on net income During...Ch. 9 - Effect of doubtful accounts on net income Using...Ch. 9 - Entries for bad debt expense under the direct...Ch. 9 - Entries for bad debt expense under the direct...Ch. 9 - Determine due date and interest on notes Determine...Ch. 9 - Entries for notes receivable Spring Designs ...Ch. 9 - Entries for notes receivable The series of five...Ch. 9 - Entries for notes receivable, including year-end...Ch. 9 - Entries for receipt and dishonor of note...Ch. 9 - Entries for receipt and dishonor of notes...Ch. 9 - Receivables on the balance sheet List any errors...Ch. 9 - Accounts receivable turnover and days sales in...Ch. 9 - Accounts receivable turnover and days sales in...Ch. 9 - Accounts receivable turnover and days sales in...Ch. 9 - Accounts receivable turnover Use the data in...Ch. 9 - Entries related to uncollectible accounts The...Ch. 9 - Aging of receivables; estimating allowance for...Ch. 9 - Compare two methods of accounting for...Ch. 9 - Details of notes receivable and related entries...Ch. 9 - Notes receivable entries The following data relate...Ch. 9 - Sales and notes receivable transactions The...Ch. 9 - Entries related to uncollectible accounts The...Ch. 9 - Aging of receivables; estimating allowance for...Ch. 9 - Compare two methods of accounting for...Ch. 9 - Details of notes receivable and related entries...Ch. 9 - Notes receivable entries The following data relate...Ch. 9 - Sales and notes receivable transactions The...Ch. 9 - Ethics in Action Bud Lighting Co. is a retailer of...Ch. 9 - Prob. 9.2CPCh. 9 - Communication On January 1, Xtreme Co. began...Ch. 9 - Estimate uncollectible accounts For several years,...Ch. 9 - Accounts receivable turnover and days sales in...Ch. 9 - Prob. 9.7CPCh. 9 - Accounts receivable turnover and days sales in...
Knowledge Booster
Similar questions
- Apple Inc. designs, manufactures, and markets personal computers and related personal computing and communicating solutions for sale primarily to education, creative, consumer, and business customers. Substantially all of the companys sales over the last five years are from sales of its Macs, iPods, iPads, and related software and peripherals. For two recent fiscal years, Apple reported the following (in millions): Assume that the accounts receivable (in millions) were 24,094 at the beginning of fiscal Year 1. 1. Compute the accounts receivable turnover for Year 2 and Year 1. Round to two decimal places. 2. Compute the days sales in receivables at the end of Year 2 and Year 1. Use 365 days and round to one decimal place. 3. What conclusions can be drawn from (1) and (2) regarding Apples efficiency in collecting receivables?arrow_forwardPolo Ralph Lauren Corporation designs, markets, and distributes a variety of apparel, home decor, accessory, and fragrance products. The companys products include such brands as Polo by Ralph Lauren, Ralph Lauren Purple Label, Ralph Lauren, Polo Jeans Co., and Chaps. Polo Ralph Lauren reported the following (in thousands) for two recent years: Assume that accounts receivable (in millions) were 486,200 at the beginning of Year 1. a. Compute the accounts receivable turnover for Year 2 and Year 1. Round to one decimal place. b. Compute the days sales in receivables for Year 2 and Year 1. Use 365 days and round to one decimal place. c. What conclusions can be drawn from these analyses regarding Ralph Laurens efficiency in collecting receivables?arrow_forwardSegment disclosure by Apple Inc. (AAPL) provides sales information for its major product lines for three recent years as follows (in millions): The Services segment includes sales from iTunes Store, App Store, Mac App Store, TV App Store, iBooks Store, Apple Music, AppleCare, and Apple Pay. The Other Products segment includes sales from Apple TV, Apple Watch, Beats products, iPod, and Apple-branded accessories. a. Which product had the greatest percentage of Year 3 sales? Which product had the least percentage of Year 3 sales? Round to nearest whole percent. b. Which product grew the most in sales, in percentage terms, using Year 1 as the base year? Round to nearest whole percent.arrow_forward
- Ralph Lauren Corporation designs, markets, and distributes a variety of apparel, home decor, accessory, and fragrance products. The companys products include such brands as Polo by Ralph Lauren, Ralph Lauren Purple Label, Ralph Lauren, Polo Jeans Co., and Chaps. Polo Ralph Lauren reported the following (in thousands) for two recent years: Assume that accounts receivable (in millions) were 607,000 at the beginning of Year 1. a. Compute the accounts receivable turnover for Year 2 and Year 1. Round to two decimal places. b. Compute the days sales in receivables for Year 2 and Year 1. Use 365 days and round to one decimal place. c. What conclusions can be drawn from these analyses regarding Ralph Laurens efficiency in collecting receivables?arrow_forwardk k As a newly appointed Chief Supply Chain Officer at YS Medical Devices, you want to figure out the company's cash-to-cash conversion cycle and make decision(s) to improve the company's performance. Here are pieces of financial data you may utilize: Sales: $23.5 million Cost of goods sold: $20.8 million Operating weeks a year: 50 Total average on-hand inventory (average inventory value): $2,150,000 Accounts receivable: $2,455,000 Accounts payable: $3,695,000arrow_forwardRotorua Products sells agricultural products in the burgeoning Asian market. The company's current assets, current liabilities, and sales over the last five years (Year 5 is the most recent year) are as follows: Sales Cash Accounts receivable, net Inventory Total current assets Current liabilities Sales Current assets: Cash Accounts receivable, net Inventory Total current assets Current liabilities Year 11 Year 2 Year 3 Year 4 Year 5 $4,545,400 $4,737,850 $ 5,126,380 $5,421,900 $5,776,190 Year 1 $ 88,854 418,283 800,380 $ 1,307,517 $ 313,578 Required: 1. Express all of the asset, liability, and sales data in trend percentages. Use Year 1 as the base year. Note: Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3). % % % % % % Year 2 $ 88,845 $ 77,057 435,833 587,279 $ 90,380 417,076 876,061 $1,383,517 $ 1,350,248 $ 1,466,414 $1,552,502 $ 346,822 $ 336,685 $ 335,107 $ 390,612 825,570 882,078 % % % % % % Year 3 % % % % Year 4 % % $ 80,928 569,984…arrow_forward
- Emerson Electric Emerson Electric is engaged in design, manufacture, and sale of a broad range of electrical, electromechanical, and electronic products and systems. The following shows Emerson's net income and net income before extraordinary items for the past 20 years (in millions): PROBLEM 2–14 Earnings Management Strategies Net Income Net Income Net Income before before before Net Extraordinary Net Extraordinary Items Net Extraordinary Year Income Items Year Income Year Income Items Y1 $201.0 $201.0 Y8 $408.9 $408.9 Y15 $ 708.1 $ 708.1 Y2 237.7 237.7 Y9 467.2 467.2 Y16 788.5 904.4 Y3 273.3 273.3 Y10 528.8 528.8 Y17 907.7 929.0 300.1 300.1 Y11 588.0 588.0 1,018.5 1,121.9 1,228.6 Y4 Y18 1,018.5 613.2 613.2 1,121.9 1,228.6 Y5 302.9 302.9 Y12 Y19 Y6 349.2 349.2 Y13 631.9 631.9 Y20 Y7 401.1 401.1 Y14 662.9 662.9 Emerson has achieved consistent earnings growth for more than 160 straight quarters (more than 40 years). CHECK Required: Income smoothing strategy a. What earnings strategy do…arrow_forwardAnalyze Apple Inc. by segment Segment disclosure by Apple Inc. (AAPL) provides sales information for its major product lines for three recent years as follows (in millions): Segment Year 3 Year 2 Year 1 iPhone $136,700 $155,041 $101,991 iPad 20,628 23,227 30,283 Mac 22,831 25,471 24,079 Services 24,348 19,909 18,063 Other Products 11,132 10,067 8,379 Total sales $215,639 $233,715 $182,795 The Services segment includes sales from iTunes Store, App Store, Mac App Store, TV App Store, iBooks Store, Apple Music, AppleCare, and Apple Pay. The Other Products segment includes sales from Apple TV, Apple Watch, Beats products, iPod, and Apple-branded accessories. a. Prepare a vertical analysis of Year 3 sales. (Round percentages to nearest whole percent.)arrow_forwardDell Incorporated is the leading manufacturer of personal computers. In a recent year, it reported the following in millions of dollars: Net sales revenue Cost of sales Beginning inventory Ending inventory $ 76,141 58,344 1,700 1,880 Required: Determine the inventory turnover ratio and average days to sell inventory for the current year. Note: Use 365 days a year. Round "Inventory turnover" to 2 decimal places and "Average days to sell inventory" to 1 decimal place. Inventory turnover Average days to sell inventory daysarrow_forward
- Ratio proficiency McDougal Printing, Inc., had sales totaling $43,000,000 in its recent fiscal year. Some ratios for the company are listed below. Use this information to determine the dollar values of various income statement and balance sheet accounts as requested. Assume a 365-day year. (Click the icon here a in order to copy the contents of the data table below into a spreadsheet.) McDougal Printing, Inc. Sales $43,000,000 Gross profit margin 83% Operating profit margin Net profit margin 35% 7% Return on total assets 14.7% Return on common equity 22% Total asset turnover 2.1 Average collection period 53.4 days Calculate values for the following: a. Gross profits b. Cost of goods sold c. Operating profits d. Operating expenses e. Earnings available for common stockholders f. Total assets g. Total common stock equity h. Accounts receivablearrow_forwardOffice Today is an office supply store. Office Today’s revenue in the current year is $800 millionand its cost of goods sold is $640 million. Compute Office Today’s gross profit and its gross profitpercentage.arrow_forwardVertical analysis Amazon.com, Inc. is the largest Internet retailer in the United States. Amazon’s income statements through income from operations for two recent years are as follows (in millions): Amazon.com, Inc. Operating Income Statements For the Years Ended December 31 (in millions) Year 2 Year 1 Product sales $70,080 $60,903 Service sales 18,908 13,549 Total sales $88,988 $74,452 Cost of sales $62,752 $54,181 Fulfillment 10,766 8,585 Marketing 4,332 3,133 Technology and content 9,275 6,565 General and administrative 1,552 1,129 Other operating expense (income), net 133 114 Total operating expenses $88,810 $73,707 Income from operations $178 $745 Required: a. Prepare a vertical analysis of the two operating income statements. Round percentages to one decimal place.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT