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For the Year 2 and Year 1, Classic Company reported the following Year 2 Year 1 $7,002.890 211.750 Sales 57.190,500 Accounts receivable 726,350 Assume that
For the Year 2 and Year 1, Classic Company reported the following Year 2 Year 1 $7,002.890 211.750 Sales 57.190,500 Accounts receivable 726,350 Assume that the accounts receivable were 5609,550 at the beginning of Year 1. Rosco Coreported the following Year Year 1 Sales $2.718,520 $2,882,040 Accounts receivable 290, 100 204,700 Assume that accounts receivable were $328,500 at the beginning of Year 1. Accounts receivable turnover ratios Year 2 Year 1 Classic Company 10 10.6 Rosco Co 9. 9.4 a. Compute the average accounts receivable turnover ratio for Classic Company and Rosco Co. for War 2 and Year 1. Round to one decimal place, Classic Company Rosco Co. . Does Classic Company or Rosco Co. have the higher average accounts receivable turnover ratio has the higher average accounts receivable turnover ratio Explain why the average turnover ratios are different in (b) Classic Company operates a specialty retail chain of stores that sells directly to individual consumers. Many of these commers (retail customers) by using MasterCard VISA which is recorded as cash sales. In contrast, Rosco manufactures foods that are sold to food wholesalers, grocery store chain, and other food distributors that eventually Rosco's products to individual consumers. Accordingly, because of the extended distribution chain, we would expect Rosco to have accounts receivable than Classic. In addition, we would expect Rosco's business customers to take a period to pay their recevables. Thus, we would expect Roscos verage accounts receivable turnover ratio to be than Classic
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