ACCT 1201 Lecture Notes - Electronic Funds Transfer, Skechers, Bank Reconciliation

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skyraven864

22 Mar 2013

School

Northeastern University

Department

Accounting

Course

ACCT 1201

Professor

Ronen Gal-or

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Document Summary

Credit card discounts, sales discounts, and sales returns and allowances. Bad debt expense and allowance for doubtful accounts. Receivables turnover ratio = net sales* average net trade accounts receivable. * ideally the numerator would be net credit sales, but companies often do not separate between cash and credit sales. Credit sales * percentage is bad calculation; general sales * percentage is even worse. Most of the time, the ratio will be greater than one. Average net trade accounts receivable ((beginning a/r + ending a/r) / 2) The receivables turnover ratio reflects how many times average trade receivables are recorded and collected during the period. The higher the ratio, the faster the collection of receivables. Average collection period = 365 receivables turnover ratio. Indicates the average time it takes a customer to pay its accounts. Example from textbook: deckers reported 2008 net sales of ,445,000. December 31, 2007, receivables were ,209,000 and december 31, 2008, receivables were ,129,000.

Related Questions

The Trade Federation releases this information for the fiscalyear:

Sales: $47,300,000

Sales Discounts: $500,000

Sales Returns & Allowances: $700,000

Outstanding Accounts Receivable (at end of FY): $7,480,000

Allowance for Doubtful Accounts (before adjustments): $7,900 credit

1. Assume the Trade Federation uses the percent salesmethod and estimates that 0.75% of NET Sales will beuncollectable.

A. Complete the journal entry necessary at the end ofthe fiscal year, December 31, to record bad debtexpense.

Date	Account	A.	Debit	Credit

2. What amount would NET receivables be reported on thebalance sheet?

cyanrat279

The following information was taken from the records of AlphabetSoup at the end of 2012:

Cash sales	$1,000,000
Credit sales	500,000
Sales discounts	5,000
Accounts Receivable	250,000
Allowance for Doubtful Accounts(before adjustment)	(25,000)
Estimated uncollected accounts	2,475
Cost of goods sold	$975,000

Determine the following:

A) Gross sales

B) Net sales

C) Gross Profit

Assuming the company uses the income statement approach toestimating uncollectibles:

D) Bad debt estimate percentage

F) Ending balance in Allowance for Doubtful Accounts afteradjustment

G) Net realizable value of receivables after adjustment for baddebts

Assuming the company uses the balance sheet approach toestimating uncollectibles:

H) Gross receivables

salmonsardine432

Consolidated Balance sheets - Thomason Inc
Consolidated Balance sheets - Thomason Inc
	31-Dec
	1997	%	1996	%
Assets
Cash	$50,000	6.13%	$46,000	5.93%
Accounts receivable	$94,000	11.52%	$86,000	11.08%
Inventories	$128,000	15.69%	$120,000	15.46%
Prepaid expenes & other rec	$14,000	1.72%	$12,000	1.55%
Total Current Assets	$286,000	35.05%	$264,000	34.02%

Property Plant & Equip	$504,000	61.76%	$482,000	62.11%
intangible	$26,000	3.19%	$30,000	3.87%
Land	$0	0.00%	$0	0.00%
Total assets	$816,000		$776,000
Liabilities & Shareholder Equity
Current liabilities	$144,000	17.65%	$140,000	18.04%
Long term liabilities	$180,000	22.06%	$180,000	23.20%
Total liabilities	$324,000	39.71%	$320,000	41.24%
Shareholder's investment
preferred stock	$100,000	12.25%	$100,000	12.89%
Class B nonvoting Pref stock
Common Stock	$180,000	22.06%	$180,000	23.20%
Additional paid in capital	$34,000	4.17%	$34,000	4.38%
Retained earnings	$178,000	21.81%	$142,000	18.30%
Total Shareholder's equity	$492,000	60.29%	$456,000	58.76%
Total Liab and S/holder's equity	$816,000	100%	$776,000	100%

18,000 common shares outstanding

Consolidated Income Statements - Thomason

30-Jun

1997

Net sales

$800,000

100%

Cost of goods sold

$485,000

60.63%

Marketing, research, administrative &oth

0.00%

$315,000

39.38%

Op exp

$244,000

30.50%

EBIT

$71,000

8.88%

Int exp

$11,000

Income before taxes

$60,000

7.50%

Tax

$20,000

2.50%

Net Income

$40,000

5.00%

The AIR turnover ratio for 1997 is:

A. 8.5

B 8.9

C 9.3

D 4.4

The number of days sales in AIR for 1997 to nearest whole day:

A 43

B 41

C 18

III

The inventory turnover ratio for 1997

A 3.91

B 4.04

C 3.68

D 0.79

The current ratio for 1997 is

A .83:1

B .85:1

C 1.13:1

D 1.99:1

Total Assets turnover ratio for 1997

A 1.04

B 0.07

C 1.01

D 0.05

VI.

The percentage of net income to net sales for 1997

A 100.00%

B 7.50%

C 2.50%

D 5.00%

VII.

The rate of return on assets for 1997

A 8.90%

B 1.63%

C 16.80%

D 5.21%

VIII.

Debt to Equity Ratio: Leverage

A 36.59%

B 65.80%

C 12.50%

D 39.71%

The earnings per share of common stock for 1997 (assumes no preferred dividends paid)

A $2.22

B $0.35

C $1.94

D $0.40

The times interest earned ratio for 1997

A 6.45

B 9

C 7.81

D 5.42

Ratios for 1997

Name of ratio

Numerator

Denominator

Ratio/$

Accounts Receivable turnover

Number of days sales in A/R for 1997

Inventory turnover ratio

Current ratio

Total Asset turnover

Percentage of net inc to net sales

Return on assets

Debt to Equity

EPS (basic)

Times interest earned ratio

violetpig5

ACCT 1201 Lecture Notes - Electronic Funds Transfer, Skechers, Bank Reconciliation

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