Question

Geisel, Inc. reported net sales revenue of $515,000 in 2018 and $627,000 in 2019. The company’s ending net receivables were $127,000 during 2017 and $124,000 during 2018. At December 31, 2019, the company had Accounts Receivable of $159,000 and an unadjusted debit balance in its Allowance for Doubtful Accounts account of $1,900. The company reported Bad Debt Expense of $11,350 during 2018. Required: Determine the net receivables at December 31, 2019. Calculate the receivables turnover ratio for 2018 and 2019. Calculate the days to collect for 2018 and 2019.

Answer 1

The ratio are worked out below;

Step-by-step explanation:

Net Receivable December 31,2019

Account Receivable $159,000

Bad Debt Expense ($11,350)

Allowance for doubtful accounts ($1,900)

Net Receivables $145,750

2018 2019

Receivable turnover ratio * 4.1 **4.64

(Net Sales/Average Receivables)

*($515,000/((127,000+124,000)/2)

**($627,000/((124,000+145,750)/2)

Days to collect ***88.9 days ****78.5 days

(Average receivables/Net sales)*365

***(((127000+124000)/2)/515,000)*365

****(((124,000+145,750)/2)/627,000)*365