Kerwick Company had accounts receivable of $100,000 on January 1, 2017. The only transactions that affected accounts receivable during 2017 were net credit sales of $1,000,000, cash collections of $920,000, and accounts written off of $30,000 Instructions (a) Compute the ending balance of accounts receivable (b) Compute the accounts receivable turnover for 2017 (c) Compute the average collection period in days. Exercise 8-14 working papers Beginning Accounts Receivable $ 100,000 Ending Accounts Receivable (6) Show your calculation below: Answer FYL: CRITICAL INFO for Small Business Owner The ratio is used to measure how effective you are at giving credit and collecting those debts. Generally, the higher the accounts receivable turnover ratio, the more efficient your business is at collecting credit from your customers. (Too low for too long = out of business). Show your calculation below (what divided by what) Answer FYI: Average number of days between the date a credit sale is made and the date the purchaser pays for that sale This number indicates the effectiveness of its accounts receivable management. A low average collection period indicates the organization collects payments faster. There is a downside to this though, as it may indicate its credit terms are too strict Customers may seek suppliers or service providers with more lenient payment terms, U A The following represents selected information taken from a company's aging schedule to estimate uncollectible accounts receivable at year-end Instructions (a) Calculate the total estimated bad debts based on the information below. (b) Prepare the year-end adjusting journal entry to record the bad debts using the allowance method and the aged uncollectible accounts receivable determined in (a). Assume the current balance in Allowance for Doubtful Accounts is a $3,000 credit (c) of the above accounts, $1,600 is determined to be specifically uncollectible Prepare the journal entry to write off the uncollectible accounts. (d) The company subsequently collects $700 on a specific account that had previously been determined to be uncollectible in (c). Prepare the journal entry (ies) necessary to restore the account and record the cash collection Problem 8-4B working papers (a) Total $375,000 Number of Days Outstanding 31 - 60 61 - 90 91 - 120 90,000 40,000 10,000 4% 596 896 0-30 220,000 196 Account Receivable Percent Uncollectible Estimated Bad Debts Over 120 15,000 20% $ 11,600 (b) (c) (d) M Debat Credit Accounts Receivable $250,000 Allowance for Doubtful 1,100 Accounts Sales Revenue 650,000 P8-5BAt December 31, 2017, the trial balance of Markowitz Company contained the following amounts before adjustment, Instructions (a) Prepare the adjusting entry at December 31, 2017, to record bad debt expense under each of the following independent assumptions, An aging schedule indicates that $13,500 of accounts receivable will be uncollectible (2) The company estimates that 2% of sales will be uncolectible. (b) Repeat part (a) assuming that instead of a credit balance, there is a $1,100 debit balance in Allowance for Doubtful Accounts. During the next month, January 2016. a $3,200 account receivable is written off as uncollectible. Prepare the journal entry to record the write-off. Repeat part (c) assuming that Markowitz Company uses the direct write-off method instead of the allowance method in accounting for uncollectible accounts receivable. Problem 8-5B ... working papers (a) (1) ka) (2) Kb) ke) (d)