1.

Accounts Receivable Turnover and Days' Sales in Receivables

Quasar, Inc. sells clothing, accessories, and personal care products for men and women through its retail stores. Quasar reported the following data for two recent years:

	Year 2		Year 1
Sales	$4,223,415		$4,218,305
Accounts receivable	324,850		310,250

Assume that accounts receivable were $354,050 at the beginning of Year 1.

a. Compute the accounts receivable turnover for Year 2 and Year 1. Round your answer to one decimal place.

Year 2:	fill in the blank 1
Year 1:	fill in the blank 2

b. Compute the days' sales in receivables for Year 2 and Year 1. Round interim calculations and final answers to one decimal place. Use 365 days per year in your calculations.

Year 2:	fill in the blank 3 days
Year 1:	fill in the blank 4 days

2. Compare Two Methods of Accounting for Uncollectible Receivables

Call Systems Company, a telephone service and supply company, has just completed its fourth year of operations. The direct write-off method of recording bad debt expense has been used during the entire period. Because of substantial increases in sales volume and the amount of uncollectible accounts, the company is considering changing to the allowance method. Information is requested as to the effect that an annual provision of % of sales would have had on the amount of bad debt expense reported for each of the past four years. It is also considered desirable to know what the balance of Allowance for Doubtful Accounts would have been at the end of each year. The following data have been obtained from the accounts:

					Year of Origin of Accounts Receivable Written Off as Uncollectible
Year	Sales		Uncollectible Accounts Written Off		1st		2nd		3rd		4th
1st	$1,280,000		$1,150		$1,150
2nd	1,690,000		2,850		1,350		$1,500
3rd	2,630,000		11,450		3,300		2,650		$5,500
4th	3,700,000		18,150				4,150		6,150		$7,850

Required:

1. Assemble the desired data. Enter a decrease in the amount of expense as a negative number and all other amounts as positive numbers.

Call Systems Company
Bad Debt Expense
Year	Expense Actually Reported	Expense Based on Estimate	Increase (Decrease) in Amount of Expense	Balance of Allowance Account, End of Year
1st	$fill in the blank a43cac0a7007008_1	$fill in the blank a43cac0a7007008_2	$fill in the blank a43cac0a7007008_3	$fill in the blank a43cac0a7007008_4
2nd	fill in the blank a43cac0a7007008_5	fill in the blank a43cac0a7007008_6	fill in the blank a43cac0a7007008_7	fill in the blank a43cac0a7007008_8
3rd	fill in the blank a43cac0a7007008_9	fill in the blank a43cac0a7007008_10	fill in the blank a43cac0a7007008_11	fill in the blank a43cac0a7007008_12
4th	fill in the blank a43cac0a7007008_13	fill in the blank a43cac0a7007008_14	fill in the blank a43cac0a7007008_15	fill in the blank a43cac0a7007008_16

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The expense actually reported is the uncollectible write-off for each quarter.

Consider the estimate and the actual expense and the time period covered. Compare the first two years and the last two years.