Cordova, Inc., reported the following receivables in its December 31, 2017, year-end balance sheet:

Additional information:
1. The notes receivable account consists of two notes, a $100,000 note and a $300,000 note. The $100,000 note is dated October 31, 2017, with principal and interest payable on October 31, 2018. The $300,000 note is dated March 31, 2017, with principal and 8% interest payable on March 31, 2018.
2. During 2018, sales revenue totaled $2,120,000, $1,980,000 cash was collected from customers, and $41,000 in accounts receivable were written off. All sales are made on a credit basis. Bad debt expense is recorded at year-end by adjusting the allowance account to an amount equal to 8% of year-end gross accounts receivable.
Required:
1. In addition to sales revenue, what revenue and expense amounts related to receivables will appear in Cordova's 2018 income statement?
2. Calculate the receivables turnover ratio for 2018.

Question

Cordova, Inc., reported the following receivables in its December 31, 2017, year-end balance sheet:

Additional information:
1. The notes receivable account consists of two notes, a $100,000 note and a $300,000 note. The $100,000 note is dated October 31, 2017, with principal and interest payable on October 31, 2018. The $300,000 note is dated March 31, 2017, with principal and 8% interest payable on March 31, 2018.
2. During 2018, sales revenue totaled $2,120,000, $1,980,000 cash was collected from customers, and $41,000 in accounts receivable were written off. All sales are made on a credit basis. Bad debt expense is recorded at year-end by adjusting the allowance account to an amount equal to 8% of year-end gross accounts receivable.
Required:
1. In addition to sales revenue, what revenue and expense amounts related to receivables will appear in Cordova's 2018 income statement?
2. Calculate the receivables turnover ratio for 2018.

Quizplus · Accepted Answer

The Answer of Cordova, Inc., reported the following receivables in its December 31, 2017, year-end balance sheet:

Additional information:
1. The notes receivable account consists of two notes, a $100,000 note and a $300,000 note. The $100,000 note is dated October 31, 2017, with principal and interest payable on October 31, 2018. The $300,000 note is dated March 31, 2017, with principal and 8% interest payable on March 31, 2018.
2. During 2018, sales revenue totaled $2,120,000, $1,980,000 cash was collected from customers, and $41,000 in accounts receivable were written off. All sales are made on a credit basis. Bad debt expense is recorded at year-end by adjusting the allowance account to an amount equal to 8% of year-end gross accounts receivable.
Required:
1. In addition to sales revenue, what revenue and expense amounts related to receivables will appear in Cordova's 2018 income statement?
2. Calculate the receivables turnover ratio for 2018.