Accounting Principles, Volume 2: Chapters 13 - 26
Accounting Principles, Volume 2: Chapters 13 - 26
12th Edition
ISBN: 9781118978764
Author: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel
Publisher: WILEY
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Chapter 18, Problem 18.11BE

(a)(1)

To determine

Accounts Receivable Turnover: The accounts receivable turnover refers to the ratio which determines the ability of a company that how efficient it is to use its assets and how efficiently it can issue the credit to the customers and collects the funds from them. The accounts receivable turnover is determined by dividing the credit sales from the average accounts receivable of that accounting period.

Average Collection Period: The average collection period refers to the average number of days which a company takes to collect the accounts receivable. The average collection period is determined by dividing the number of days in a year from the accounts receivable turnover.

To determine: (a) For each year (1) the accounts receivable turnover and (2) the average collection period and (b) conclusions that can be drawn from the data.

(b)

To determine

(b) conclusions that can be drawn from the data.

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Jones Manufacturing Co. Ltd. makes a product by way of three consecutive processes. Inspection takes place during the processing operation, at which point bad units are separated from good units and sold as scrap at $20 each. Normal losses are estimated to be 5% of input during the period. The following data relates to process 2 for the month of October. During October, 20,000 units valued at $400,000 were transferred from process 1 to process 2. Other costs incurred during the month were: Direct material added Direct labour Production overheads $272,000 $254,000 $ 120,400 At inspection, 3000 units were rejected as scrap. These units had reached the following degree of completion: Transfer from process 1 Direct material added Conversion costs 100% 80% 50% Work-in-progress at the end of October was 4,000 units and had reached the following degree of completion: Transfer from process 1 Direct material added 100% 60% 40% Conversion costs There were no unfinished goods in process 2 at the…
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Chapter 18 Solutions

Accounting Principles, Volume 2: Chapters 13 - 26

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Accounts Receivable and Accounts Payable; Author: The Finance Storyteller;https://www.youtube.com/watch?v=x_aUWbQa878;License: Standard Youtube License