On January 1, 2021, the general ledger of 3D Family Fireworks includes the following account balances: AccountsDebit CreditCash$26,500 Accounts Receivable 14,900 Allowance for Uncollectible Accounts $3,400 Supplies 3,800 Notes Receivable (6%, due in 2 years) 17,000 Land 80,200 Accounts Payable 8,300 Common Stock 97,000 Retained Earnings 33,700 Totals$142,400 $142,400 During January 2021, the following transactions occur: January 2 Provide services to customers for cash, $48,100.January 6 Provide services to customers on account, $85,400.January 15 Write off accounts receivable as uncollectible, $3,100.January 20 Pay cash for salaries, $32,700.January 22 Receive cash on accounts receivable, $83,000.January 25 Pay cash on accounts payable, $6,800.January 30 Pay cash for utilities during January, $15,000. The following information is available on January 31, 2021.The company estimates future uncollectible accounts. The company determines $4,200 of accounts receivable on January 31 are past due, and 20% of these accounts are estimated to be uncollectible. The remaining accounts receivable on January 31 are not past due, and 5% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.)Supplies at the end of January total $900.Accrued interest revenue on notes receivable for January. Interest is expected to be received each December 31.Unpaid salaries at the end of January are $34,800. 1) Enter your Accounts Receivable turnover value in 1 decimal place and Ratio of Allowance for Uncollectible Accounts in Whole number. Analyze how well 3D Family Fireworks manages its receivables(a) Calculate the receivables turnover ratio for the month of January (Hint: For the numerator, use total services provided to customers on account). If the industry average of the receivables turnover ratios for the month of January is 4.6 times, is the company collecting cash from customers more or less efficiently than other companies in the same industry?Accounts Receivable turnover: times The company is collecting more efficiently. (true or false) (b) Calculate the ratio of Allowance for Uncollectible Accounts to Accounts Receivable at the end of January. 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?Ratio of Allowance for Uncollectible Accounts to Accounts Receivable % Should the company expect improving or worsening conditions?

Journal entry: Journal entry is the book of original entry where first transactions are recorded in…

Answered: The company estimates future…

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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Question

On January 1, 2021, the general ledger of 3D Family Fireworks includes the following account balances:

Accounts	Debit		Credit
Cash	$	26,500
Accounts Receivable		14,900
Allowance for Uncollectible Accounts				$	3,400
Supplies		3,800
Notes Receivable (6%, due in 2 years)		17,000
Land		80,200
Accounts Payable					8,300
Common Stock					97,000
Retained Earnings					33,700
Totals	$	142,400		$	142,400

During January 2021, the following transactions occur:

January	2	Provide services to customers for cash, $48,100.
January	6	Provide services to customers on account, $85,400.
January	15	Write off accounts receivable as uncollectible, $3,100.
January	20	Pay cash for salaries, $32,700.
January	22	Receive cash on accounts receivable, $83,000.
January	25	Pay cash on accounts payable, $6,800.
January	30	Pay cash for utilities during January, $15,000.

The following information is available on January 31, 2021.

The company estimates future uncollectible accounts. The company determines $4,200 of accounts receivable on January 31 are past due, and 20% of these accounts are estimated to be uncollectible. The remaining accounts receivable on January 31 are not past due, and 5% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.)
Supplies at the end of January total $900.
Accrued interest revenue on notes receivable for January. Interest is expected to be received each December 31.
Unpaid salaries at the end of January are $34,800.

1) Enter your Accounts Receivable turnover value in 1 decimal place and Ratio of Allowance for Uncollectible Accounts in Whole number.

Analyze how well 3D Family Fireworks manages its receivables
(a) Calculate the receivables turnover ratio for the month of January (Hint: For the numerator, use total services provided to customers on account). If the industry average of the receivables turnover ratios for the month of January is 4.6 times, is the company collecting cash from customers more or less efficiently than other companies in the same industry?
Accounts Receivable turnover:		times

The company is collecting more efficiently. (true or false)

(b) Calculate the ratio of Allowance for Uncollectible Accounts to Accounts Receivable at the end of January. 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?
Ratio of Allowance for Uncollectible Accounts to Accounts Receivable	%

Should the company expect improving or worsening conditions?

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