Accounts Receivable Turnover and Days' Sales in Receivables Classic Company designs, markets, and distributes a variety of apparel, home decor, accessory, and fragrance products. The company's products include such brands as Polo by Classic, Classic Purple Label, Classic, Polo Jeans Co., and Chaps. Polo Classic reported the following for two recent years: Sales Accounts receivable For the Period Ending Year 2 $4,251,520 Year 1 $4,217,940 401,500 416,100 Assume that accounts receivable were $372,300 at the beginning of Year 1. a. Compute the accounts receivable turnover for Year 2 and Year 1. Round your answers to two decimal places. Year 2:1 Year 1: b. Compute the days' sales in receivables for Year 2 and Year 1. Round your final answers to one decimal place. Use 365 days per year in your calculations. Year 2: Year 1: days days in the efficiency of change. The change in the days' sales in receivables is a(n) c. The change in the accounts receivable turnover from year 1 to year 2 indicates a(n) collecting accounts receivable and is a(n) change. > Percent of Sales Method At the end of the current year, Accounts Receivable has a balance of $880,000, Allowance for Doubtful Accounts has a credit balance of $8,000, and sales for the year total $3,960,000. Bad debt expense is estimated at 1.25% of sales. a. Determine the amount of the adjusting entry for uncollectible accounts. b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Adjusted Balance Debit (Credit) Accounts Receivable Allowance for Doubtful Accounts Bad Debt Expense c. Determine the net realizable value of accounts receivable. Analysis of Receivables Method At the end of the current year, Accounts Receivable has a balance of $535,000, Allowance for Doubtful Accounts has a credit balance of $5,000, and sales for the year total $2,410,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $20,000. a. Determine the amount of the adjusting entry for uncollectible accounts. b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Accounts Receivable Allowance for Doubtful Accounts Bad Debt Expense c. Determine the net realizable value of accounts receivable. Note Receivable Same Day Surgery Center received a 120-day, 7% note for $96,000, dated June 12, from a customer on account. Assume 360 days in a year. a. Determine the due date of the note. b. Determine the maturity value of the note. c. Journalize the entry to record the receipt of the payment of the note at maturity. If an amount box does not require an entry, leave it blank. Nature of Uncollectible Accounts The XYZ Corporation owns and operates hotels and casinos including the XYZ Grand and the Bellagio in Las Vegas, Nevada. As of a recent year, XYZ reported accounts receivable of $707,000 and allowance for doubtful accounts of $108,878. Patient Care manufactures and sells a wide range of healthcare products including Band-Aid bandages and Tylenol. As of a recent year, Patient Care reported accounts receivable of $873,000 and allowance for doubtful accounts of $20,079. a. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for the XYZ Corporation. Round your answer to one decimal place. % b. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for Patient Care. Round your answer to one decimal place. % c. Possible reasons for the difference in the two ratios computed in (a) and (b) include: a. Casino operators historically lose money on operations. b. Casino operators have larger accounts receivable. c. Individuals who may have adequate creditworthiness could overextend themselves and lose more than they can afford if they get caught up in the excitement of gambling. d. Casino operations experience greater bad debt risk because it is difficult to control the creditworthiness of customers entering the casino. Entries for Uncollectible Accounts, using Direct Write-Off Method Journalize the following transactions in the accounts of Arrow Medical Co., a medical equipment company that uses the direct write-off method of accounting for uncollectible receivables: Jan. 19. Sold merchandise on account to Dr. Sinclair Welby, $56,700. The cost of the merchandise sold was $30,600. July 7. Received $14,700 from Dr. Sinclair Welby and wrote off the remainder owed on the sale of January 19 as uncollectible. Nov. 2. Reinstated the account of Dr. Sinclair Welby that had been written off on July 7 and received $42,000 cash in full payment. If an amount box does not require an entry, leave it blank. Jan. 19-sale >Jan. 19-cost July 7 Nov. 2-reinstate Entries for Uncollectible Receivables, using Allowance Method Journalize the following transactions in the accounts of Arizona Interiors Company, a Restaurant Supply Company that uses the allowance method of accounting for uncollectible receivables May 1. Sold merchandise on account to Taiwan Palace Co., $14,800. The cost of the merchandise sold was $10,700. Aug. 30. Received $4,300 from Taiwan Palace Co. and wrote off the remainder owed on the sale of May 1 as uncollectible. Dec. 8. Reinstated the account of Taiwan Palace Co. that had been written off on August 30 and received $10,500 cash in full payment. If an amount box does not require an entry, leave it blank May 1-sale May 1-cost Aug. 30 Dec. instated Dec-collection Customer Conover Industries Keystone Company Due Date Number of Days Past Due July 10 days September 21 days Moxie Creek Inc. Rainbow Company Swanson Company October 16 days November 5 days December 21 days b. Complete the aging-of-receivables schedule by adding the omitted accounts to the bottom of the schedule and updating the totals. If an amount box does not require an entry, leave it blank. Kirchhoff Industries Aging of Receivables Schedule November 30 Not Past Days Past Days Past Days Past Days Past Customer Balance Due Due 1-30 Due 31-60 Due 61-90 Due Over 90 Academy Industries Inc 4,500 4,500 Ascent Company 4,200 4,200 Zoot Company 11,100 11,100 Subtotals 864,100 521,900 190,100 83,000 43,200 25,900 Conover Industries Keystone Company Movie Creek Inc. Rainbow Company Swanson Company Tutals