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Presented below is information for Windsor, Inc. for 2017: 1. Beginning-of-the-year Accounts Receivable balance was $173,000. Net sales for the year were $1,400,000. $150,000 of the sales were cash sales. Windsor does not offer cash discounts for 2. early payment. 3. Collections on accounts receivable during the year were $1,202,000. Windsor plans to factor accounts receivable totaling $60,000 at the end of the year. Windsor will transfer the accounts to Herzog Factors, Inc. with recourse. Herzog Factors will retain 3% of the balances for probable adjustments and assesses a finance charge of 5%. The fair value of the recourse obligation is $1,600.

Presented below is information for Windsor, Inc. for 2017: 1. Beginning-of-the-year Accounts Receivable balance was $173,000. Net sales for the year were $1,400,000. $150,000 of the sales were cash sales. Windsor does not offer cash discounts for 2. early payment. 3. Collections on accounts receivable during the year were $1,202,000. Windsor plans to factor accounts receivable totaling $60,000 at the end of the year. Windsor will transfer the accounts to Herzog Factors, Inc. with recourse. Herzog Factors will retain 3% of the balances for probable adjustments and assesses a finance charge of 5%. The fair value of the recourse obligation is $1,600.

Financial Accounting Intro Concepts Meth/Uses
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter8: Revenue Recognition, Receivables, And Advances From Customers
Section: Chapter Questions
Problem 42P
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### Accounts Receivable Turnover Calculation To assess Windsor’s accounts receivable turnover for the year, consider the following two scenarios: 1. **Assuming Factoring**: Calculate the turnover assuming that receivables are sold as described. 2. **Assuming No Factoring**: Calculate the turnover assuming Windsor does not factor the receivables. **Note:** Please round all answers to two decimal places (e.g., 52.70). #### Input Fields for Calculations: - **Assuming Factoring**: [______] times - **Assuming No Factoring**: [______] times This exercise will help illustrate the impact of factoring on accounts receivable efficiency.
Transcribed Image Text:### Accounts Receivable Turnover Calculation To assess Windsor’s accounts receivable turnover for the year, consider the following two scenarios: 1. **Assuming Factoring**: Calculate the turnover assuming that receivables are sold as described. 2. **Assuming No Factoring**: Calculate the turnover assuming Windsor does not factor the receivables. **Note:** Please round all answers to two decimal places (e.g., 52.70). #### Input Fields for Calculations: - **Assuming Factoring**: [______] times - **Assuming No Factoring**: [______] times This exercise will help illustrate the impact of factoring on accounts receivable efficiency.
**Financial Information for Windsor, Inc. (2017)** 1. **Accounts Receivable at Year Start**: - The balance was $173,000. 2. **Net Sales for the Year**: - Total net sales amounted to $1,400,000. - Of this, $150,000 were cash sales. - Windsor, Inc. does not offer cash discounts for early payments. 3. **Collections on Accounts Receivable**: - Amount collected during the year totaled $1,202,000. **Accounts Receivable Factoring Plan**: - Windsor intends to factor $60,000 of its accounts receivable at year-end. - These will be transferred to Herzog Factors, Inc. with recourse. - Herzog Factors will retain 3% of the balance for possible adjustments. - A finance charge of 5% will be applied. - The fair value of the recourse obligation is calculated at $1,600. This information is crucial for understanding Windsor, Inc.'s financial operations and decision-making regarding accounts receivable and cash flow management for 2017.
Transcribed Image Text:**Financial Information for Windsor, Inc. (2017)** 1. **Accounts Receivable at Year Start**: - The balance was $173,000. 2. **Net Sales for the Year**: - Total net sales amounted to $1,400,000. - Of this, $150,000 were cash sales. - Windsor, Inc. does not offer cash discounts for early payments. 3. **Collections on Accounts Receivable**: - Amount collected during the year totaled $1,202,000. **Accounts Receivable Factoring Plan**: - Windsor intends to factor $60,000 of its accounts receivable at year-end. - These will be transferred to Herzog Factors, Inc. with recourse. - Herzog Factors will retain 3% of the balance for possible adjustments. - A finance charge of 5% will be applied. - The fair value of the recourse obligation is calculated at $1,600. This information is crucial for understanding Windsor, Inc.'s financial operations and decision-making regarding accounts receivable and cash flow management for 2017.
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