Review Assignment: Future Mart

Unit $3$: Accounting for Cash and Accounts Receivable

PART D:

On April ${30}^{th},$ Future Mart issued a $$10,000,12-$month, $4\%$ note to settle an outstanding

account receivable. The interest and the principal will be due on May $1^{st}$ of next year. Future

Mart's year$-$end is December ${31}^{st}.$

Instructions:

a$)$ Record the creation of the note receivable on April ${30}^{th}$

b$)$ Record the entry for accrued interest on December ${31}^{st}$

c$)$ Assume that the customer paid the full amount of interest and principal on May $1^{st}$ of

next year, record the entry to record the payment.

PART E:

The following chart indicates some key numbers with regards to Future Shops receivables $($in

thousands$)$ for $2020$ through $2022$:

a$)$ Calculate the receivable turnover ratio and collection period for $2021$ and $2022$

b$)$ Comment on the state of credit collection at Future Mart at the end of $2022.$ Has it

improved or not?

c$)$ If Future Mart includes the credit terms $\frac{n}{60}$ on their invoices, briefly comment on

whether or not customers are respecting Future Mart's credit terms.