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

Answer:

The ratio are worked out below;                                        

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