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SPI-CC Inc. has the following information for the year ended April 30, 2021: SPI-CC Inc. April 30, 2021 Accounts Receivable Customer Total 0-30 31-60 61-90

SPI-CC Inc. has the following information for the year ended April 30, 2021:

SPI-CC Inc.
April 30, 2021
Accounts Receivable
Customer Total 0-30 31-60 61-90 91+
ABC $ 159,250 $ 132,000 $ 15,600 $ 10,900 $ 750
DT $ 38,700 $ 32,700 $ 1,500 $ 1,400 $ 3,100
Forta $ 72,550 $ 39,800 $ 14,250 $ 17,000 $ 1,500
Zync $ 42,100 $ 32,100 $ 10,000 $ - $ -
Report Totals $ 312,600 $ 236,600 $ 41,350 $ 29,300 $ 5,350

The CFO has determined that the following percentages of receivables to default:

0-30 .015

31-60 .020

61-90 .09

91+ .10

The following is the incomplete Statement of Earnings for April 30, 2021, and comparative for 2020 and 2019:

SPI-CC Inc.
April 30, 2021
Statement of Earnings
2021 2020 2019
Net Sales $ 1,507,819 $ 1,425,761 $ 1,375,891
COGS $ 981,000 $ 905,000 $ 885,000
Gross Profit
Operating Expense $ 427,891 $ 411,560 $ 399,871
Operating Income
Other Income $ 5,100 (3,200) $ 4,200
Net Income
Net A/R $ 312,600 $ 297,850 $ 288,751

Required:

  1. Calculate the adjustments for allowance for doubtful accounts.
  2. If the preadjustment balance for doubtful accounts before the $9,400 write off was a debit $750, calculate bad debt expense. Prepare the proper entry for bad debt expense.
  3. The CFO has just hired a student from ACCT 1510 to complete the statement provided above and do the following analysis. (20 marks) [HINT: Complete the missing information from the chart first]
  1. Gross Profit Margin
  2. Net Profit Margin
  3. AR turnover
  4. Average Collection Period
  5. Provide some quick analysis on the ratios you calculated.

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