che WorldBiz operates divisions around the world. Its European division-EuroBiz (EB) has recently reported the following information to you at WorldBiz's head office. You are trying to decide whether to direct your internal audit staff to investigate more closely From the Financial Statement Notes Accounts Receivable (gross) Allowance for Doubtful Accounts Accounts Receivable, Net Years $100.000 (5.000) 95, Year 4 560,000 (6) 54,000 Year 140.000 (4,000) 36.000 Other Information Gathered Net Sales Revenue Accounts Receivable Write-offs Bad Debt Expense Sales Discounts (2/10, n/30) $590,000 5,900 5,900 3,000 $540,000 6,100 8,100 9,000 $490,000 6,100 7,350 5,099 Required: 1-4. For each of the years calculate the proportion of gross accounts receivable estimated to be uncollectible as allowed for in the Allowance for Doubtful Accounts. 1-b. Which year does not align with the other two? 2-a. For each of the years, calculate the proportion of Net Sales Revenue that Bad Debt Expense represents. 2-b. Which year does not align with the other two? 3-o. Did customers take greater (or lesser) advantage of sales discounts in Year 5 than in Year 4 and Year 3? 3-b. Does this indicate customers were more or less likely to promptly pay their balances in Year 5 as compared to prior yeas 4-a. Calculate the average days to collect in Year 5 and Year 4. 4-b. Does this measure indicate customers paid their balances faster for slower) in Year 5 as compared to Year 4? 5-a. Indicate (yes or no) whether you should direct your internal audit staff to investigate EB's receivables management practices more closely. For each of the years, calculate the proportion of gross accounts receivable estimated to be uncollectible as allowed for in the Allowance for Doubtful Accounts Year 5 Year 4 Year 3 Proportion of Gross Accounts Receivables Which year does not align with the other two? Year 5 Year 4 Yoar 3 For each of the years, calculate the proportion of Net Sales Revenue that Bad Debt Expense represents. (Round your answers to 1 decimal place.) Year 5 Year 4 Year 3 Proportion of Net Sales Revenue Req 1A Reg 1B Req 2A Reg 2 Req Reg Which year does not align with the other two? Year 5 Year 4 Year 3 Did customers take greater (or lesser) advantage of sales discounts in Year 5 than in Year 4 and Year 3? Greater Lesser Does this indicate customers were more or less) likely to promptly pay their balances in Year 5 as compared to prior years? More Less Calculate the average days to collect in Year 5 and Year 4. (Use 365 days in a year. Round your intermediate calculations to 1 decimal place.) Year 5 Average days to collect Year 4 days days Does this measure indicate customers paid their balances faster (or slower) in Year 5 as compared to Year 47 Faster Slower Indicate (yes or no) whether you should direct your internal audit staff to investigate EB's receivables management practices more closely. Yes ONO
