Edmund Supplies Company sold $3,170$ metal connectors on account to Door Incorporated for $$200$ each on September $15.$ Each metal connector costs Edmund $$150$ to make. Door has $60$ days to return the unused goods. Edmund believes that Door will ultimately return $75$ of the connectors. On September $29,$ Door returns $50$ connectors. Edmund has a September $30$ fiscal year end. At year end, Edmund believes $75$ connectors is a good estimate of the total that will be returned. The cost of recovering these products is immaterial. Edmund expects to be able to resell these goods for a profit.

Instructions

Prepare the following journal entries on the books of Edmund Company:

Entries to record the initial sales on September $15.$

Entries to record the return of goods September $29.$

Entries to record the year$-$end adjustment based on estimated returns on September $30.$

$2.$ Brewing Company began the year with a debit balance in Accounts Receivable of $$650,000$ and a credit balance in Allowance for Doubtful Accounts of $$32,500.$ On January $14,$ a collection was made on the previously written off account of Cardinal Co$.$ for $$4,200.$ On January $23,$ the decision was made to write$-$off an account belonging to Cub Co$.$ for $$5,400$ for which all reasonable collection options had been exhausted.

Instructions

Prepare the following journal entries on the books of Brewing Company:

Entries to record the collection of the previously written off account on January $14.$

Entries to record the write$-$off of the account on January $23.$

$3.$ Covill Company reported net credit sales of $$6,070,000$ this year. The company had accounts receivable of $$565,000$ at the beginning of the year. During the year, Covill collected accounts receivable of $$5,880,000,$ wrote off $$38,450$ on uncollectible accounts, collected $$3,600$ worth of previously written off accounts, and booked an additional bad debt expense estimate of $$42,300.$

Instructions

What is Covill's accounts receivable turnover for the year?

What is Covill's average days to collect?

What does this average days to collect number tell financial statement users and how can it be used for analysis of receivables and the collection process?