Compute accounts receivable turnover ratio for year

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Reference no: EM13549101

At December 31, 2008, Sycamore International Foods reported the following information on its balance sheet:

During 2009, the company had the following transactions related to receivables

Accounts receivable

$1,020,000

Less: Allowance for doubtful accounts

60,000

1. Sales on account

$2,670,000

2. Sales returns and allowances

40,000

3. Collections of accounts receivable

2,300,000

4. Write-offs of accounts receivable deemed uncollectible

65,000

5. Recovery of bad debts previously written off as uncollectible.

20,000

Instructions

(a) Prepare the journal entries to record each of these five transactions. Assume that no cash discounts were taken on the collections of accounts receivable.

(b) Enter the January 1, 2009, balances in Accounts Receivable and Allowance for Doubtful Accounts. Post the entries to the two accounts (use T accounts), and determine the balances.

(c) Prepare the journal entry to record bad debts expense for 2009, assuming that an aging of accounts receivable indicates that estimated bad debts are $95,000.

(d) Compute the accounts receivable turnover ratio for the year 2009.

Reference no: EM13549101

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