Financial Accounting
14th Edition
ISBN: 9781305088436
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 9, Problem 29E
(a)
To determine
Calculate the average
(b)
To determine
Identify whether Company H or Incorporation L has the higher average accounts receivable turnover ratio.
(c)
To determine
Explain the reason for the difference in average accounts receivable turnover ratio between Company H and Incorporation L.
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Use the data in Exercises 9-27 and 9-28 to analyze the accounts receivable turnover ratios of the Campbell Soup Company and American Eagle Outfitters, Inc.a. Compute the average accounts receivable turnover ratio for Campbell Soup and American Eagle for the years shown in Exercises 9-27 (See attachment) and 9-28 (See attachment).b. Does Campbelll Soup or American Eagle have the higher average accounts receivable turnover ratio?c. Explain why the average turnover ratios are different in (b).
Activity measures:
m. Calculate the accounts receivable turnover and number of days' sales in accounts receivable (based on a 365-day year) for the most
recent year.
n. Based on your analysis in m, do you believe that the company is doing an effective job at managing accounts receivable? What would you
estimate the industry averages to be for the accounts receivable turnover and number of days' sales in accounts receivable? Explain.
o. Calculate the inventory turnover and number of days' sales in inventory (based on a 365-day year) for the most recent year.
p. Based on your analysis in o, to what extent does the company need to be concerned about its inventory management policies? In
assessing the inventory management policies, would you be more interested in knowing current ratio or acid-test ratio information?
Explain.
What is accounts payable turnover?a. Purchases on account divided by average accounts payableb. A measure of liquidityc. A measure of the number of times a year a company is able to pay its accounts payabled. All of the listed answers are correct.
Chapter 9 Solutions
Financial Accounting
Ch. 9 - What are the three classifications of receivables?Ch. 9 - Dans Hardware is a small hardware store in the...Ch. 9 - What kind of an account (asset, liability, etc.)...Ch. 9 - After the accounts are adjusted and closed at the...Ch. 9 - A firm has consistently adjusted its allowance...Ch. 9 - Which of the two methods of estimating...Ch. 9 - Neptune Company issued a note receivable to...Ch. 9 - If a note provides for payment of principal of...Ch. 9 - The maker of a 240,000, 6%, 90-day note receivable...Ch. 9 - The note receivable dishonored in Discussion...
Ch. 9 - Prob. 1PEACh. 9 - Journalize the following transactions, using the...Ch. 9 - Prob. 2PEACh. 9 - Journalize the following transactions, using the...Ch. 9 - At the end of the current year, Accounts...Ch. 9 - At the end of the current year, Accounts...Ch. 9 - At the end of the current year, Accounts...Ch. 9 - At the end of the current year, Accounts...Ch. 9 - Guzman Company received a 60-day, 5% note for...Ch. 9 - Prefix Supply Company received a 120-day, 8% note...Ch. 9 - Financial statement data for years ending December...Ch. 9 - Prob. 6PEBCh. 9 - Prob. 1ECh. 9 - MGM Resorts International owns and operates hotels...Ch. 9 - Journalize the following transactions in the...Ch. 9 - Prob. 4ECh. 9 - Creative Solutions Company, a computer consulting...Ch. 9 - At the end of the current year, the accounts...Ch. 9 - Toot Auto Supply distributes new and used...Ch. 9 - The accounts receivable clerk for Waddell...Ch. 9 - Waddell Industries has a past history of...Ch. 9 - Using data in Exercise 9-9, assume that the...Ch. 9 - Selbys Bike Co. is a wholesaler of motorcycle...Ch. 9 - Using the data in Exercise 9-11, assume that the...Ch. 9 - The following selected transactions were taken...Ch. 9 - The following selected transactions were taken...Ch. 9 - Prob. 15ECh. 9 - Using the data in Exercise 9-15, assume that...Ch. 9 - Casebolt Company wrote off the following accounts...Ch. 9 - Seaforth International wrote off the following...Ch. 9 - Determine the due date and the amount of interest...Ch. 9 - Master Designs Decorators issued a 180-day, 6%...Ch. 9 - Prob. 21ECh. 9 - Prob. 22ECh. 9 - Journalize the following transactions of Trapper...Ch. 9 - Journalize the following transactions in the...Ch. 9 - Prob. 25ECh. 9 - Polo Ralph Lauren Corporation designs, markets,...Ch. 9 - Prob. 27ECh. 9 - Prob. 28ECh. 9 - Prob. 29ECh. 9 - The following transactions were completed by The...Ch. 9 - Trophy Fish Company supplies flies and fishing...Ch. 9 - Call Systems Company, a telephone service and...Ch. 9 - Flush Mate Co. wholesales bathroom fixtures....Ch. 9 - The following data relate to notes receivable and...Ch. 9 - The following were selected from among the...Ch. 9 - The following transactions were completed by The...Ch. 9 - Wig Creations Company supplies wigs and hair care...Ch. 9 - Prob. 3PBCh. 9 - Gen-X Ads Co. produces advertising videos. During...Ch. 9 - The following data relate to notes receivable and...Ch. 9 - The following were selected from among the...Ch. 9 - Prob. 1CPCh. 9 - For several years, Xtreme Co.s sales have been on...Ch. 9 - Prob. 3CPCh. 9 - Prob. 4CPCh. 9 - Prob. 5CP
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- Review the select information for Bean Superstore and Legumes Plus (industry competitors), and then complete the following. A. Compute the accounts receivable turnover ratios for each company for 2018 and 2019. B. Compute the number of days sales in receivables ratios for each company for 2018 and 2019. C. Determine which company is the better investment and why. Round answers to two decimal places.arrow_forwardWhich of the following is NOT a correct explanation for turnover ratios and periods calculated based on them? Select one: a. Receivables turnover indicates how many times a company circulates its receivables in a year. b. Average collection period is the number of days between the sale transaction and the collection of receivable from customer. c. Inventory turnover is the number of days between purchase of inventory and its sale to the customer. d. Average payment period is the number of days between the purchase transaction and the payment of payables to the suppliers. Clear my choicearrow_forwardIf you are told that LSJ Company turns its accounts receivable over every 33 days…this would represent an example of what type of analysis: a. Vertical Analysis b. Horizontal Analysis c. Ratio Analysisarrow_forward
- What relationship exists between the average collection period and accounts receivable turnover? Select one: a. There is a direct and proportional relationship. b. Both ratios are expressed in number of days. c. As average collection period increases (decreases) the accounts receivable turnover decreases (increases). d. Both ratios are expressed in number of times receivables are collected per year.arrow_forwardNeed answer the questionarrow_forwardWhich of the following calculations of receivable turnover is correct? A. Number of days in the year divided by receivable turnover. B. Net sale on account divided by average receivables. C. Cost of goods sold divided by average inventory. D. Net income divided by net sales.arrow_forward
- Review the select information for Liquor Plaza and Beer Buddies (industry competitors) and complete the following. A. Compute the accounts receivable turnover ratios for each company for 2018 and 2019. B. Compute the number of days sales in receivables ratios for each company for 2018 and 2019. C. Determine which company is the better investment and why. Round answers to two decimal places.arrow_forwardUse the following information to answer the questions that follow. A. Calculate the operating income percentage for each of the stores. Comment on how your analysis has changed for each store. B. Perform a vertical analysis for each store. Based on your analysis, what accounts would you want to investigate further? How might management utilize this information? C. Which method of analysis (using a dollar value or percentage) is most relevant and/or useful? Explain.arrow_forwardJuroe Company provided the following income statement for last year: Juroes balance sheet as of December 31 last year showed total liabilities of 10,250,000, total equity of 6,150,000, and total assets of 16,400,000. Required: 1. Calculate the return on sales. (Note: Round the percent to two decimal places.) 2. CONCEPTUAL CONNECTION Briefly explain the meaning of the return on sales ratio, and comment on whether Juroes return on sales ratio appears appropriate.arrow_forward
- Mifflin Company reported the following for the current year: Net sales Cost of goods sold Beginning balance in accounts receivable Ending balance in accounts receivable Compute (a) accounts receivable turnover and (b) days' sales uncollected. Hint. Accounts receivable turnover uses average accounts receivable, and days' sales uncollected uses the ending balance in accounts receivable. Accounts Receivable Turnover Compute the accounts receivable turnover. Complete this question by entering your answers in the tabs below. Days Sales Uncollected Numerator: " $ 62,700 41,000 1 1 14,600 6,300 Denominator: Accounts Receivable Turnover Accounts Receivable Turnover Accounts receivable turnover timesarrow_forwardHow do you calculate accounts receivable turnover? Select an answer: Take the beginning A/R balance, add the ending A/R balance, divide by two, then divide the result into sales revenue Take the beginning A/R balance, add the ending A/R balance, then divide the result into sales revenue divided by two Take the ending A/R balance, subtract the beginning A/R balance, then divide the result into sales revenue. Take the starting A/R balance, subtract the ending A/R balance, then divide the result into sales revenue divided by two.arrow_forwardThe numerator in calculating the accounts receivable turnover is a. average accounts receivable b. accounts receivable at year-end c. sales d. total assetsarrow_forward
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