learning objective 6 4 questions 1 consider the following information cash sales 59 4307223

learning objective 6 4 questions 1 consider the following information cash sales 59 4307223

Learning Objective 6.4 Questions

1) Consider the following information:

Cash sales $ 59,000

Credit sales 510,000

Beginning Cash 18,000

Ending Cash 11,500

Beginning Retained Earnings 32,300

Ending Retained Earnings 41,700

Beginning Accounts Receivable 40,000

Ending Accounts Receivable 50,000

Net Income 64,000

What is the accounts receivable turnover?

A) 1.20

B) 2.92

C) 11.33

D) 12.64

E) 13.78

2) Consider the following information:

Cash sales $ 59,000

Credit sales 510,000

Beginning Cash 18,000

Ending Cash 11,500

Beginning Retained Earnings 32,300

Ending Retained Earnings 41,700

Beginning Accounts Receivable 40,000

Ending Accounts Receivable 50,000

Net Income 64,000

Assuming a 365-day year, determine the days to collect accounts receivable.

A) 304.2 days

B) 125.0 days

C) 31.9 days

D) 32.22 days

E) 28.4 days

3) Why is it difficult to compare accounts receivable turnover across companies?

A) companies do not typically differentiate credit sales from total sales

B) companies do not typically differentiate net sales from total sales

C) companies do not typically differentiate beginning retained earnings from total retained earnings

D) it violates SEC regulation to calculate accounts receivable turnover for public companies

E) it is not difficult to compare accounts receivable turnover across companies

4) Typically, the more credit sales a company has

A) the lower the days to collect accounts receivable

B) the higher the days to collect accounts receivable

C) the lower the accounts receivable turnover rate

D) the higher the accounts receivable yield

E) none of the above

5) All else equal, the lower the accounts receivable turnover ratio and the higher the days to collect accounts receivable, the better.

6) The accounts receivable turnover ratio indicates how rapidly customers pay their bills.

7) The days to collect accounts receivable is calculated by dividing credit sales by the average accounts receivable.

8) Heal of Approval Spa reports the following information for the years ended December 31, 20X2 and 20X3:

20X3 20X2

Sales $ 640,000 $720,000

Accounts Receivable 40,00060,000

Sales consisted of 80% credit sales and 20% cash sales during 20X2 and 20X3.

From the information given previously for Heal of Approval Spa, determine the

a. accounts receivable turnover for 20X3.

b. days to collect accounts receivable for 20X3.

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