Derry Co. is a company in the industry of selling and installing laundry systems, Derry choose financial period ending by December 31. The following were selected from among the transactions completed during 2020.

2019

Oct 10 Sold merchandise to Edin, and received $6,000 cash. The cost of the merchandise sold was $3,800.

Nov 13 Sold $25,000 merchandise to Flora, receive $12,000 in cash this day and the rest would follow Derrys credit policy of 1/15, n/30. The cost of merchandise sold was $15,300.

Dec 31 During 2019, Derry Co. offered sales of 30,000 laundry devices with one-year warranty-on-part policy. A provision was made by Derry Co., based on the managements experience, 900 units (3%) will be defective and that warranty repair costs will average $4 per unit. Journalize this provision.

Dec 31 Based on an analysis of the $92,000 of accounts receivable, it was estimated that $9,848 will be uncollectible, given the balance of the account Allowance for doubtful accounts before adjustment is $1,050. Journalize this adjusting entry.

2020

Feb 23 Received $8,000 from Flora for the sales on Nov 13th 2020, a $5,000, 12%, 2 month note also received this day, in settlement of the account of Flora.

Mar 9 Wrote off the $3,600 balance owed by Georgi which has no

assets.

Apr 11 600 units of 2019 sales were defective, it costs Derry Co. $4 each unit for repair costs in order to honor warranty contracts. Journalise this warranty honored.

Requirements:

1. Journalise these transactions into the book of Derry Co. for 2 years 2019 and 2020 (Show calculation!)

2. Derry Co. had a balance in the Accounts Receivable account of $92,000 at the end of 2019 and $98,000 at the end of 2020. Net credit sales during 2020 amounted to $665,000.

(a) Calculate the average collection period of the receivables in terms of days.

(b) Comment on the result from (a), given that the average industrys days in receivables collection is 60 days.