Professional Simulation - Chapter 7 Cash & Receivables Rolling Corporation manufactures sweatshirts for sale to athletic-wear retailers. The following information was available for Rolling for the years ended December 31, 2018 and 2019 Cash Accounts Receivable Allowance for doubtful accounts Inventory Current Liabilities Total Credit sales Collections on accounts receivable December 31, 2018 20,000 40,000 5,500 85,000 80,000 480,000 440,000 December 31, 2019 15,000 ? ? 80,000 86,000 550,000 500,000 During 2019, Rolling had the following transactions: 1 On June 30, sales of $50,000 to a major customer were settled, with Rolling accepting a 1-year $50,000 note bearing 11% interest, payable at maturity. Rolling factors some accounts receivable at the end of the year. Accounts totaling $47,700 are transferred to First Factors, Inc, with recourse. First Factors will receive the collections from Rolling's customers and retain 6% of the balances. Rolling is assessed a finance charge of 4% on this transfer. The fair market value of the recourse liability is $4,000. On the basis of the latest available information, the 2014 provision for bad debts is estimated to be.8% of credit sales, Rolling charged off as uncollectible, accounts with balances of $2,300, 2 3. Measurement: Based on the above transactions, determine the balance for Accounts Receivable and Allowance for Doubtful Accounts at December 31, 2019 H Measurement: Based on the above transactions, determine the balance for Accounts Receivable and Allowance for Doubtful Accounts at December 31, 2019 Financial Statement: Prepare the current assets section of Rolling's balance sheet at December 31, 2019. The cash balance at December 31, 2014, reflects the following items: checking account $9,600, postage stamps $100, petty cash $300, currency $3,000, customers' checks (post-dated) $2,000. Anaylsis: Compute the current ratio and the accounts receivable turnover ratio for Rolling at December 31, 2019. Use these measures to analyze Rolling's liquidity. The accounts receivable turnover ratio in 2018 was 10.37 Explanation: Discuss how the analysis above would be affected if Rolling had transferred the accounts receivable in a secured borrowing transaction Professional Simulation - Chapter 7 Cash & Receivables Rolling Corporation manufactures sweatshirts for sale to athletic-wear retailers. The following information was available for Rolling for the years ended December 31, 2018 and 2019 Cash Accounts Receivable Allowance for doubtful accounts Inventory Current Liabilities Total Credit sales Collections on accounts receivable December 31, 2018 20,000 40,000 5.500 85.000 80,000 480,000 440,000 December 31, 2019 15,000 ? 2 80,000 86,000 550,000 500,000 1 During 2019, Rolling had the following transactions: On June 30, sales of $50,000 to a major customer were settled, with Rolling accepting a 1-year $50,000 note bearing 11% interest, payable at maturity. Rolling factors some accounts receivable at the end of the year. Accounts totaling $47,700 are transferred to First Factors, Inc. with recourse. First Factors will receive the collections from Rolling's customers and retain 6% of the balances. Rolling is assessed a finance charge of 4% on this transfer. The fair market value of the recourse liability is $4,000. 3. On the basis of the latest available information, the 2014 provision for bad debts is estimated to be.8% of credit sales. Rolling charged off as uncollectible, accounts with balances of $2,300. 2. Measurement: Based on the above transactions, determine the balance for Accounts Receivable and Allowance for Doubtful Accounts at December 31, 2019 Financial Statement: Prepare the current assets section of Rolling's balance sheet at December 31, 2019. The cash balance at December 31, 2014, reflects the following items: checking account $9,600, postage stamps $100, petty cash $300, currency $3,000, customers' checks (post-dated) $2,000 Anaylsis: Compute the current ratio and the accounts receivable tumover ratio for Rolling at December 31, 2019. Use these measures to analyze Rolling's liquidity. The accounts receivable turnover ratio in 2018 was 10.37 Explanation: Discuss how the analysis above would be affected if Rolling had transferred the accounts receivable in a secured borrowing transaction
