Maraton Inc. imports gourmet coffee and sells it to local restaurants. All sales are made on account with terms net 30. Maraton Inc. uses the perpetual inventory method and the first-in first out costing method. At the beginning of the year, Maraton Inc. had the following account balances 1. Accounts receivable balance of $3,000 and an allowance for doubtful accounts of $800. All the amounts were owed from A Ltd. 2. Opening inventory of 100 units at $50 per unit. The company had the following transactions during the fiscal year ended December 31, 2023: Date Feb. 15 Mar 15 May 1 May 30 Aug 1 Sep 25 Transaction Purchase 400 units at $55 per unit for cash. Received $2,500 from A Ltd. Wrote off the remaining balance as uncollectible. Sold 300 units to B Ltd. on account at $110 per unit B Ltd. paid the balance owed from the May 1 sale. Purchased 300 units at $70 per unit on credit. Sold 300 units to C Ltd. on account at $120 per unit. Nov 15 Purchased 200 units at $65 per unit on credit. Dec 4 Sold 300 units to D Ltd. on account at $125per unit. At the end of the year Maraton Inc. uses the aging method of estimating its uncollectible accounts. Maraton Inc. estimates that the amount that will not be collectible is 20% if the receivable is overdue more than 60 days, 10% if overdue equal to or less than 60 days and 2% if not yet due. Required 1. Prepare all necessary entries to record the transactions above and to record the appropriate allowance for doubtful accounts at year end. Show your calculations. Round any intermediate values to 4 decimal places. Round final journal entry amounts to two decimal places. 2. Calculate the accounts receivable turnover ratio for the year ended December 31, 2023.
Maraton Inc. imports gourmet coffee and sells it to local restaurants. All sales are made on account with terms net 30. Maraton Inc. uses the perpetual inventory method and the first-in first out costing method. At the beginning of the year, Maraton Inc. had the following account balances 1. Accounts receivable balance of $3,000 and an allowance for doubtful accounts of $800. All the amounts were owed from A Ltd. 2. Opening inventory of 100 units at $50 per unit. The company had the following transactions during the fiscal year ended December 31, 2023: Date Feb. 15 Mar 15 May 1 May 30 Aug 1 Sep 25 Transaction Purchase 400 units at $55 per unit for cash. Received $2,500 from A Ltd. Wrote off the remaining balance as uncollectible. Sold 300 units to B Ltd. on account at $110 per unit B Ltd. paid the balance owed from the May 1 sale. Purchased 300 units at $70 per unit on credit. Sold 300 units to C Ltd. on account at $120 per unit. Nov 15 Purchased 200 units at $65 per unit on credit. Dec 4 Sold 300 units to D Ltd. on account at $125per unit. At the end of the year Maraton Inc. uses the aging method of estimating its uncollectible accounts. Maraton Inc. estimates that the amount that will not be collectible is 20% if the receivable is overdue more than 60 days, 10% if overdue equal to or less than 60 days and 2% if not yet due. Required 1. Prepare all necessary entries to record the transactions above and to record the appropriate allowance for doubtful accounts at year end. Show your calculations. Round any intermediate values to 4 decimal places. Round final journal entry amounts to two decimal places. 2. Calculate the accounts receivable turnover ratio for the year ended December 31, 2023.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
This is a practice problem for my midterm. I would like a detailed steps and explination as I don't know how to solve it.
Transcribed Image Text:Maraton Inc. imports gourmet coffee and sells it to local restaurants. All sales are made on account with
terms net 30. Maraton Inc. uses the perpetual inventory method and the first-in first out costing method.
At the beginning of the year, Maraton Inc. had the following account balances
1. Accounts receivable balance of $3,000 and an allowance for doubtful accounts of $800. All the
amounts were owed from A Ltd.
2. Opening inventory of 100 units at $50 per unit.
The company had the following transactions during the fiscal year ended December 31, 2023:
Date
Feb. 15
Mar 15
May 1
May 30
Aug 1
Sep 25
Transaction
Purchase 400 units at $55 per unit for cash.
Received $2,500 from A Ltd. Wrote off the remaining balance as
uncollectible.
Sold 300 units to B Ltd. on account at $110 per unit
B Ltd. paid the balance owed from the May 1 sale.
Purchased 300 units at $70 per unit on credit.
Sold 300 units to C Ltd. on account at $120 per unit.
Nov 15
Purchased 200 units at $65 per unit on credit.
Dec 4
Sold 300 units to D Ltd. on account at $125per unit.
At the end of the year Maraton Inc. uses the aging method of estimating its uncollectible accounts.
Maraton Inc. estimates that the amount that will not be collectible is 20% if the receivable is overdue more
than 60 days, 10% if overdue equal to or less than 60 days and 2% if not yet due.
Required
1. Prepare all necessary entries to record the transactions above and to record the appropriate allowance
for doubtful accounts at year end. Show your calculations. Round any intermediate values to 4 decimal
places. Round final journal entry amounts to two decimal places.
2. Calculate the accounts receivable turnover ratio for the year ended December 31, 2023.
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