If Gilmore's estimate of bad debts is correct (2.2% of credit sales) and the gross margin is 20%, by how much did Gilmore's income from operations increase assuming $150,000 of the sales would have been lost if credit sales were not offered?

If Gilmore's estimate of bad debts is correct (2.2% of credit sales) and the gross margin is 20%, by how much did Gilmore's income from operations increase assuming $150,000 of the sales would have been lost if credit sales were not offered?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: At the end of the current year, the unadjusted trial balance of Branco, Incorporated, indicated…

A: Bad debts expenses of current year$320,720Accounts receivable of current…

Q: Blackfly Ltd. had sales of $500,000 in 2007, all made on credit terms. The company collected…

A: The problem is asking us to calculate the bad debt expense for Blackfly Ltd. for the year 2007. The…

Q: Gilmore Electronics had the following data for a recent year:Cash sales…

A: I am answering the first 3 sub-parts of the question as per bartleby guidelines. Please re-submit…

Q: Galenic Inc. is a wholesaler for a range of phamaceutical products. Before deducting any losses from…

A: Given, Profit margin = 6% Bad debt ratio = 1% Reduce bad debt ratio to 70 / 9,160

Q: sells tyres on credit only. The management of the company estimated that it could increase sales by…

A: Collection period is period required to receive payments from customers that are due to customers…

Q: 5. Organics Plus is considering which bad debt estimation method works best for its company. It is…

A: Adjusting entries are to be recorded in the financial statement for any unrecognized income or…

Q: Problem: A company's credit policy is based on terms of net 60, but it expects to average a days…

A: The cost of goods sold = 15 million * 60% = 9000000 Funds blocked on an average in an year = 9000000…

Q: Organics Plus is considering which bad debt estimation method works best for its company. It is…

A: Credit Sales $1,810,000 Accounts Receivable $ 600,000 Bad debts as percentage of credit…

Q: A company plans to tighten its credit policy. The new policy will decrease the average number of…

A: Credit Policy is very crucial for company's working cycle. It should be optimal so that the…

Q: ection period. BECK does not offer discounts for early payment; thus, customers take the full 30…

A: Basic concept of cash discount and receivable collection period

Q: Which of the following changes in credit standards and terms would cause a decrease in profit? A)…

A: Changes in credit standards and credit terms have a meaningful impact on the profitability of the…

Q: Dome Metals has credit sales of $468,000 yearly with credit terms of net 60 days, which is also the…

A: Firm often make strategies to collect account receivables outstanding balance at an early point of…

Q: Route Canal Shipping Company has the following schedule for aging of accounts receivable: Age of…

A: Accounts receivable aging is a periodic report that categorizes a company's accounts receivable…

Q: Matu Inc. has the following information during the year: sales 2,000,000 sales discounts 30,000…

A: Account receivable is the asset which show the amount to be receivable from the customer on their…

Q: Credit sales were $100,000 for the year, ending Accounts receivable was $25,000. The company…

A: Solution: Amount of bad debt expense to be booked = Credit sales * 5%

Q: 1758) Libre, Incorporated has experienced bad debt losses of 5% of credit sales in prior periods. At…

A: Allowance for doubtful accounts - Allowance for doubtful accounts is the provision made by the…

Q: Creek Company uses the percentage of credit sales method in determining its bad debt expense. The…

A: Introduction: When credit is no longer recoverable due to a customer's inability to fulfil their…

Q: What is the receivales turnover and what is the average collection period (days sales outstanding) ?

A: Information Provided: Credit sales = $10,640,000 Receivables = $1,520,000

Q: In 2013, Coca-Cola had a receivables turnover ratio of9.3. Which of the following actions could…

A: Receivables turnover ratio: It refers to a measure of accounting that is used to determine the…

Q: The change in the credit policy would result to increase (decrease) in incremental profit of (Use…

A: The increase in incremental profit is when the total benefit derived from credit policy is higher…

Q: Creek Company uses the percentage of credit sales method in determining its bad debt expense. The…

A: Introduction: A bad debt expense is recognized when a receivable is really no longer collectible…

Q: A firm has total annual sales (all credit) of P1,200,000 and accounts receivable of P500,000. How…

A: Accounts receivable days = (Accounts receivables / Credit sales) x 365

Q: TMRW Co. has annual credit sales of $1,080,000 and an average collection period of 32 days in 2010.…

A: 1. TMRW Co.- Average accounts receivable balance = (Annual Credit Sales / 360 days) x Average…

Q: Peanut Inc. is evaluating whether to change its credit terms from 2/10 net 30 to 3/10 net 30. At…

A: Account receivables (AR) is current assets (CA) for the firm. To make effective collections and…

Q: A company's management estimates that 2.5% of net credit sales will be uncollectible net credit…

A: Income statement: The income statement determines the net income of the business by subtracting the…

Q: Bulldogs Inc. had credit sales last year amounted to P18,600,000. The firm also had an average…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: If ABC Corporation has annual credit sales of Ᵽ990,000 and its average accounts receivable is…

A: The Numerical has covered the concept of Accounting Ratio. The Formula is used to calculate the…

Q: Net credit sales $831, 400 Account Receivable 222,850 Allowance for Doubtful Account 0. Do the…

A: Allowance for doubtful accounts - Allowance for doubtful accounts is the provision made by the…

Q: Blackfly Ltd. had sales of $500,000 in 2007, all made on credit terms. The company collected $25,000…

A: In accrual accounting, businesses account for the possibility of customers not paying their…

Q: The following information pertains to Striker Corporation, together with its DSO/ACP of the firms…

A: Investment in accounts receivables can be calculated by using this formula Accounts receivables…

Q: Bad Debt Expense: Percentage of Credit Sales Method Bradford Plumbing had the following data for a…

A: Introduction:- The bad debt to sales ratio is the organization's uncollectible accounts receivables…

Q: They recorded $134,560 in accounts receivable for the year and $323,660 in credit sales. The…

A: Solution:- Introduction:- As per the Percent of sales method, Bad debts expense can be identified…

Q: Libre, Incorporated has experienced bad debt losses of 5% of credit sales in prior periods. At the…

A: In percentage of credit sales method Bad debt expense = credit sales × Estimated Nad debt…

Q: The Company has annual turnover of Rs. 25000000 (Of which 60 percent is credit sales). Bad debt is 2…

A: Credit sales = Total sales * Percentage of credit sales Credit sales = Rs. 25000000 * 0.60 Credit…

Q: Accounts receivable determined to be uncollectible 9,650 The firm's estimated rate for bad debts is…

A: The redudction of gross margin on lost sale and saving of cost of bad debts would affect income from…

Q: Milo Company uses the percent-of-sales method to estimate uncollectibles. Net credit sales for the…

A: Balance of allowance for uncollectible accounts after adjustments = $4,400 Less: wrote off old…

Q: A company has $50,000 in accounts receivable. The company estimates that 5% of accounts receivable…

A: The net realizable value of accounts receivable is the amount the company expects to collect after…

Q: 13. Khaled Company provides for bad debts expense at the rate of 4% of credit sales. The following…

A: Company provide allowances for bad debts depending on credit sales. Beginning allowance =12500 Bad…

Q: Mann, is the credit manager of MCC Inc. Mr. Mann would like to estimate the cost of credit sales.…

A: Assuming normal distribution gives you option that you can use the equations of normal distribution…

Q: ABC Corp. has net credit sales of P1,440,000 yearly with credit terms of n/30, which is also the…

A: Formula: Accounts receivable turnover = Net credit sales / Average accounts receivable Average…

Q: At December 31, 2020, Net Solutions reported a Cash Sales of $900,000 and Credit Sales of $300,000.…

A: Journal entry is the basic or initial step into the accounting cycle and it helps in preparing the…

Question

100%

Definition Definition Receivable amount that a company is owed, but did not receive, and which may not be receivable in future.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Please provide me with a correct answer
Payroll entries Widmer Company had gross wages of $350,000 during the week ended June 17. The amount of wages subject to social security tax was $350,000, while the amount of wages subject to federal and state unemployment taxes was $52,500. Tax rates are as follows: Social security Medicare State unemployment Federal unemployment June 7 Wages Expense 6.0% 1.5% 5.4% The total amount withheld from employee wages for federal taxes was $70,000. If an amount box does not require an entry, leave it blank. a. Journalize the entry to record the payroll for the week of June 17. June 7 Payroll Tax Expense 0.8% Social Security Tax Payable Medicare Tax Payable Employees Federal Income Tax Payable Wages Payable Social Security Tax Payable Medicare Tax Payable 350,000 THEA b. Journalize the entry to record the payroll tax expense incurred for the week of June 17. ✓ 21,000 5,250 HOW! 88
5. The Adams Company had total credit sales for the year of $1,500,000. As of year end, but before estimating bad debts, the company had a $130,000 debit balance in accounts receivable and a $500 credit balance in the allowance for uncollectible accounts. If the Adams Company estimates bad debts as 4% of ending accounts receivable, the journal entry of the Adams Company will be: a. Bad debt expense Allowance for doubtful accounts b. Bad debt expense Accounts receivable c. Bad debt expense Accounts receivable d. Bad debt expense Allowance for doubtful accounts $4,700 $5,200 $5,200 $5,700 $4,700 $5,200 $5,200 $5,700
ABC & Company is making sales of Rs.16,00,000 and it extends a credit of 90 days to its customers. However, in order to overcome the financial difficulties, it is considering to change the credit policy. The proposed terms of credit and expected sales are given here under: Policy Terms Sales 1 75 days Rs.15,00,000 II 60 days Rs. 14,50,000 III 45 days Rs 14,25,000 IV 30 days Rs 13,50,000 V 15 days Rs.13,00,000 The firm has variable cost of 80% and fixed cost of Rs.1,00,000. The cost of capital is 15%. Evaluate different policies and which policy should be adopted?
Q2. A company currently has annual sales of Rs. 500,000 and an average collection period of 30 days. It is considering a more liberal credit policy. If the credit period is extended, the company expects sales and bad-debt losses to increase in following manner: Credit policy А Increase in credit period Increase in sale (Rs) Bad debts % of total sales 25,000 1.2 35,000 1.5 40,000 1.8 50,000 ABCDE 10 days 15 30 42 2.2 The selling price per unit is Rs 2. Average cost per unit at the current level of operations is Rs. 1.50 and variable cost per unit is Rs. 1.20. if current bad debt loss is 1% and required rate of return on investment is 20%, which credit policy should be undertaken? Ignore taxes and assume 360 days in a year.
Total credit sales of the company was OMR 100,000 and total credit purchase was OMR 60,000. The estimated bad debts expense based on past experience is 8%. Calculate the value of bad debts expense under percentage of sales method. E (1 Mark) OMR 12,800 OMR 3,200 OMR 4,800 OMR 8,000
The AR Company had sales of $5 million in 1991. It is estimated that 80% of all sales are on credit. a. If the balance in accounts receivable at the end of 1991 was $500,000 and $750 million , how long did it take AR’s customers to pay? b. Suppose AR extends credit to customers on the basis of 2/10, net 30. How does the actual time it takes customers to pay compare with these credit terms if the accounts receivable balance is $500,000? if the accounts receivable balance is $750? c. Critique the use of the number of days credit to evaluate AR’s collections.
7
How to do? 2
eBook Organics Plus is considering which bad debt estimation method works best for its company. It is deciding between the income statement method, balance sheet method of receivables, and balance sheet aging of receivables method. If it uses the income statement method, bad debt would be estimated at 4 percent of credit sales. If it were to use the balance sheet method, it would estimate bad debt at 12 percent of accounts receivable. If it were to use the balance sheet aging of receivables method, it would split its receivables into three categories: 0-30 days past due at 6 percent, 31-90 days past due at 19 percent, and over 90 days past due at 26 percent. There is currently a zero balance, transferred from the prior year's Allowance for Doubtful Accounts. The following information is available from the year-end income statement and balance sheet. 2018 Year-End Total for Organics Plus Credit Sales $1,880,000 Accounts Receivable 620,000 There is also additional Information regarding…