9 2000 points value Geisel Inc reported net sales revenue of

9. 20.00 points value: Geisel, Inc. reported net sales revenue of $522,000 in 2015 and $623,000 in 2016. The company\'s average net receivables were $117,000 during 2014 and $135,000 during 2015. At December 31, 2016, the company had Accounts Receivable of $150,000. and an unadjusted debit balance in its Allowance for Doubtful Accounts account of $1,100. The company reported Bad Debt Expense of $8,530 during 2016. Required: a. Determine the net receivables at December 31, 2016. Net receivables b. Calculate the receivables turnover ratio for 2015 and 2016. (Round your intermediate calculations and final answers to 1 decimal place. Use 365 days a year.) 2015 2016 Accounts Receivable Turnover Ratio c. Calculate the days to collect for 2015 and 2016. (Round your intermediate calculations and final answers to 1 decimal place. Use 365 days a year.) 2015 2016 Days to Collect

Solution

a.

Adjusted allowances for doubtful accounts

= Unadjusted debit balance in allowances+ Bad debt expenses

= $ 1,100 + $ 8,530 = $ 9,630

Net receivable = Gross receivable - allowances for doubtful accounts

Net receivable for 2016 = $ 150,000 - $ 9,630 = $ 140,370

b.

Receivable turnover ratio = Net credit sales /Average account receivable

Receivable turnover ratio for 2015 = $ 522,000/ [($ 117,000 + $ 135,000)/2]

                                                            = $ 522,000/ ($ 252000/2)

                                                            = $ 522,000/ $ 126000

                                                            = 4.1428571 or 4.1 times

Receivable turnover ratio for 2016 = $ 623,000/ [($ 135,000 + $ 140,370)/2]

                                                           = $ 623,000/ ($ 275,370/2)

                                                          = $ 623,000/ $ 137,685

                                                          = 4.5248211 or 4.5 times

c.

Days to collect receivable = No. of days in a period/ Account receivable turnover ratio

Days to collect receivable in 2015 = 365/ 4.1 = 89.02439024 or 89.0 days

Days to collect receivable in 2016 = 365/4.5 = 81.11111111 or 81.1 days