Question
The Tidwell Company began 2013 with accounts receivable of $180,000 and an allowance for uncollectible accounts of $12,000 (credit balance). Bad debt expense for the
The Tidwell Company began 2013 with accounts receivable of $180,000 and an allowance for uncollectible accounts of $12,000 (credit balance). Bad debt expense for the year was $15,000 and the ending balance in the allowance for uncollectible accounts account was $17,000. The accounts receivable turnover ratio for 2013 was 10.0. This ratio was calculated using the average of gross accounts receivable in the denominator (that is, [$180,000 + year-end accounts receivable] divided by 2). Also, the companys inventory turnover ratio for 2013 was 6.0, its average inventory for the year $200,000, and its gross profit ratio 50%.
Required:
1. What was the amount of accounts receivable written off during the year?
2. What was the amount of cash collected from customers during the year? (All sales are made on a credit basis and there were no collections of previously written off receivables or sales returns.) Be sure to show all your work!
3. Disregard your answer to requirement 2 and the turnover ratios given in the problem, and assume that net sales for the year were $3,000,000 and accounts receivable at the end of the year totaled $400,000. What was the amount of cash collected from customers during the year?
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