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a-1. The receivables turnover ratio is a-2. The company collecting cash from customers

a-1. The receivables turnover ratio is a-2. The company collecting cash from customers

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Cash Accounts Receivable Allowance for Uncollectible Accounts Supplies Notes Receivable (6%, due in 2 years) Land Accounts Payable Common Stock Retained Earnings Totals $26,100 14,700 3,600 15,000 80,000 $139,400 a-1. The receivables turnover ratio is a-2. The company collecting cash from customers January 20 Pay cash for salaries, $32,500. January 22 Receive cash on accounts receivable, $81,000. January 25 Pay cash on accounts payable, $6,600. January 30 Pay cash for utilities during January, $14,800. $1,400 During January 2024, the following transactions occur: January 2 Provide services to customers for cash, $46,100. January 6 Provide services to customers on account, $83,400. January 15 Write off accounts receivable as uncollectible, $2,500. (Assume the company uses the allowance method) 9,500 95,000 33,500 $139,400 Exercise 5-21 (Algo) Part 7 7. Analyze how well 3D Family Fireworks manages its receivables: a-1. Calculate the receivables turnover ratio for the month of January. (Hint: For the numerator, use total services provided to customers on account.) (Round your final answer to 1 decimal place.) a-2. If the industry average of the receivables turnover ratios for the month of January is 4.4 times, is the company collecting cash from customers more or less efficiently than other companies in the same industry? b-1. Calculate the ratio of Allowance for Uncollectible Accounts to Accounts Receivable at the end of January. (Round percentage to 1 decimal place.) b-2. Based on a comparison of this ratio to the same ratio at the beginning of January, does the company expect an improvement or worsening in cash collections from customers on credit sales?
Transcribed Image Text:Cash Accounts Receivable Allowance for Uncollectible Accounts Supplies Notes Receivable (6%, due in 2 years) Land Accounts Payable Common Stock Retained Earnings Totals $26,100 14,700 3,600 15,000 80,000 $139,400 a-1. The receivables turnover ratio is a-2. The company collecting cash from customers January 20 Pay cash for salaries, $32,500. January 22 Receive cash on accounts receivable, $81,000. January 25 Pay cash on accounts payable, $6,600. January 30 Pay cash for utilities during January, $14,800. $1,400 During January 2024, the following transactions occur: January 2 Provide services to customers for cash, $46,100. January 6 Provide services to customers on account, $83,400. January 15 Write off accounts receivable as uncollectible, $2,500. (Assume the company uses the allowance method) 9,500 95,000 33,500 $139,400 Exercise 5-21 (Algo) Part 7 7. Analyze how well 3D Family Fireworks manages its receivables: a-1. Calculate the receivables turnover ratio for the month of January. (Hint: For the numerator, use total services provided to customers on account.) (Round your final answer to 1 decimal place.) a-2. If the industry average of the receivables turnover ratios for the month of January is 4.4 times, is the company collecting cash from customers more or less efficiently than other companies in the same industry? b-1. Calculate the ratio of Allowance for Uncollectible Accounts to Accounts Receivable at the end of January. (Round percentage to 1 decimal place.) b-2. Based on a comparison of this ratio to the same ratio at the beginning of January, does the company expect an improvement or worsening in cash collections from customers on credit sales?
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