Best Buy is a specialty retailer of consumer electronics, including personal computers,entertainment software, and appliances. Best Buy operates retail stores in addition to theBest Buy, Media Play, On Cue, and Magnolia Hi-Fi websites. For two recent years, BestBuy reported the following (in millions):Year 2Year 1Sales$39,528$40,339Accounts receivable at end of year1,1621,280Assume that the accounts receivable (in millions) were $1,308 at the beginning offiscal Year 1.1. Compute the accounts receivable turnover for Year 2 and Year 1. Round to two decimalplaces.2. Compute the days' sales in receivables at the end of Year 2 and Year 1. Use 365 daysand round to one decimal place.What conclusions can be drawn from (1) and (2) regarding Best Buy's3.efficiency in collecting receivables?4.What assumption did we make about sales for the Best Buy ratio computa-tions that might distort the ratios and therefore cause the ratios not to be comparablefor Year 2 and Year 1?

Accounts receivable turnoverAccounts receivable turnover is a liquidity measure of accounts…

Answered: Best Buy is a specialty retailer of…

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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Below are amounts (in millions) from three companies' annual reports. Beginning Accounts Receivable Ending Accounts Receivable Net Sales WalCo TarMart $1,815 $2,762 $322,427 6,166 6,694 67,878 CostGet 629 665 68,963 Required: 1. Calculate the receivables turnover ratio and the average collection period for WalCo, TarMart and CostGet. 2. Which company appears most efficient in collecting cash from sales? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the receivables turnover ratio and the average collection period for WalCo, TarMart and CostGet. (Enter your rounded to 1 decimal place.) WalCo TarMart CostGet Choose Numerator Receivables Turnover Ratio Choose Denominator Average Collection Period Choose Numerator Choose Denominator = Receivables turnover ratio times times times = Average collection period
Walker Clothing Store had a balance in the Accounts Receivable account of $780,000 at the beginning of the year and a balance of $820,000 at the end of the year. Net credit sales during the year amounted to $7,000,000. The average collection period of the receivables in terms of days was 42 days. 365 days. 10 days 37 days
Below are amounts (in millions) from three companies' annual reports. WalCo TarMart CostGet Required: Beginning Accounts Receivable $1,805 6,116 619 Ending Accounts Receivable $2,752 6,644 655 Net Sales $321,427 66,878 67,963 1. Calculate the receivables turnover ratio and the average collection period for WalCo, TarMart and CostGet. 2. Which company appears most efficient in collecting cash from sales?
At December 31, 20X0, Oettinger Corporation, a premium kitchen cabinetmaker for the home remodeling industry, reported the following accounts receivable information on its year-end balance sheet: Gross accounts receivable $850,000 Less: Allowance for credit losses (25,000) Accounts receivable (net) $825,000 During 20X1, the company had credit sales of $8,200,000 of which it collected $7,975,000. Oettinger employs the sales revenue approach to estimate its bad debt provisions and, continuing to use the same 1% used in previous years, made the normal adjustment at the end of 20X1. Although 20X1 started off well, the industry experienced a slowdown in the last four months of the year, and cash collections consequently dropped off substantially. Moreover, a major customer, which owed Oettinger $85,000, unexpectedly filed for bankruptcy and went out of business during November, at which time its account was written off. Oettinger's controller is concerned that some customers are…
Dapper Hat Makers Company sells merchandise on credit. During the fiscal year ended July 31, the company had net sales of $2,300,000. At the end of the year, it had Accounts Receivable of $600,000 and a debit balance in Allowance for Uncollectible Accounts of $3,400. In the past, approximately 1.4 percent of net sales have proved to be uncollectible. Also, an aging analysis of accounts receiv- able reveals that $30,000 of the receivables appears to be uncollectible. Prepare journal entries to record uncollectible accounts expense using (a) the percentage of net sales method and (b) the accounts receivable aging method. (c) what is the resulting balance of allowance for uncollecible accounts under each method? how woukd your answer under each method change if allowance for uncollectible accounts had a credit balance of $3,400 instead of a debit balance? why do the methods result in different balances?
Universal Sports Supply began the year with an accounts receivable balance of $200,000 and a year-end balance of $220,000. Credit sales of $750,000 generate a gross profit of $250,000. Calculate the receivables turnover ratio for the year. Universal Sports Supply Receivables Turnover Ratio Numerator/Denominator Amounts 0 times
Bassett Stores Company and Fox Stores Inc. are large retail department stores. Both companies offer credit to their customers through their own credit card operations. Information from the financial statements for both companies for two recent years is as follows (all numbers are in millions): Bassett Fox Merchandise sales $229,950 $321,200 Credit card receivables—beginning 37,356 66,625 Credit card receivables—ending 31,188 51,295 a. (1) Determine the accounts receivable turnover for both companies. Round to one decimal place. Bassett Stores fill in the blank 1 Fox Stores fill in the blank 2 (2) Determine the days' sales in receivables for both companies. Assume there are 365 days in the year. Round intermediate calculations to the nearest whole dollar and final answers to one decimal place. Bassett Stores fill in the blank 3 days Fox Stores fill in the blank 4 days b. What conclusion can be drawn regarding the two companies and…
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A wholesaler was considering supplying three retailers, but inventory shortages have forced him to select only one retailer. Wholesaler’s credit manager is evaluating the credit record of three retailers. Over the past 05 years, data reveals these retailers’ accounts receivables following average number of days: Lee: 62.2 61.8 63.4 63.0 61.7 Bee: 62.5 61.9 62.8 63.0 60.7 Chee: 62.0 61.9 63.0 63.9 61.5 The credit manager feels that consistency, in addition to lowest average, is important factor in deciding the best retailer. Which retailer should be selected by the credit manager for the supply of inventory?

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