Geisel, Inc. reported net sales revenue of $522,000 in 2018 and $628,000 in 2019. The company’s ending net receivables were $112,000 during 2017 and $131,000 during 2018. At December 31, 2019, the company had Accounts Receivable of $144,000 and an unadjusted debit balance in its Allowance for Doubtful Accounts account of $1,800. The company reported Bad Debt Expense of $9,990 during 2019. Required: Determine the net receivables at December 31, 2019. Calculate the receivables turnover ratio for 2018 and 2019. Calculate the days to collect for 2018 and 2019.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Geisel, Inc. reported net sales revenue of $522,000 in 2018 and $628,000 in 2019. The company’s ending net receivables were $112,000 during 2017 and $131,000 during 2018. At December 31, 2019, the company had Accounts Receivable of $144,000 and an unadjusted debit balance in its Allowance for Doubtful Accounts account of $1,800. The company reported
Required:
- Determine the net receivables at December 31, 2019.
- Calculate the receivables turnover ratio for 2018 and 2019.
- Calculate the days to collect for 2018 and 2019.
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