A manufacturer/dealer disclosed the following information related to its selling activities and receivable balances:

Required:
1. Determine the ending gross accounts receivable balance for 2010 and 2011.
2. Did the accounts receivable turnover rise or fall from 2010 to 2011 and by how much?
3. Compute the age of accounts receivable for 2010 and 2011. Comment on the factors that might have caused the two ratios to change in 2011.
4. What effect does a significant increase in bad debt expense have on accounts receivable turnover and age of accounts receivable? Explain the effect in both real and economic terms.

Question

A manufacturer/dealer disclosed the following information related to its selling activities and receivable balances:
  
Required:
1. Determine the ending gross accounts receivable balance for 2010 and 2011.
2. Did the accounts receivable turnover rise or fall from 2010 to 2011 and by how much?
3. Compute the age of accounts receivable for 2010 and 2011. Comment on the factors that might have caused the two ratios to change in 2011.
4. What effect does a significant increase in bad debt expense have on accounts receivable turnover and age of accounts receivable? Explain the effect in both real and economic terms.

Quizplus · Accepted Answer

The Answer of A manufacturer/dealer disclosed the following information related to its selling activities and receivable balances:
  
Required:
1. Determine the ending gross accounts receivable balance for 2010 and 2011.
2. Did the accounts receivable turnover rise or fall from 2010 to 2011 and by how much?
3. Compute the age of accounts receivable for 2010 and 2011. Comment on the factors that might have caused the two ratios to change in 2011.
4. What effect does a significant increase in bad debt expense have on accounts receivable turnover and age of accounts receivable? Explain the effect in both real and economic terms.

A Manufacturer/dealer Disclosed the Following Information Related to Its Selling