Question

In: Accounting

What amount does a company expect to collect from Accounts Receivable? A) gross amount of Accounts...

What amount does a company expect to collect from Accounts Receivable?

A) gross amount of Accounts Receivable

B) net realizable value of Accounts Receivable

C) gross amount of Accounts Receivable minus Allowance for Uncollectible Accounts

D) B and C

Emma Jones Company has the following information available:

Account	12/31/2019	12/31/2018
Accounts Payable	$76,500	$80,000
Accounts Receivable, net	42,300	49,000
Cash and Cash Equivalents	43,700	70,000
Inventories	100,000	99,000
Long-Term Investments	20,000	100,000
Short-Term Investments	27,000	44,000
Income Taxes Payable	2,000	5,000
Long-Term Notes Payable	20,000	30,000

Did the quick ratio improve from 2018 to 2019?

A) No.

B) Yes.

C) It stayed the same.

D) There is not enough information.

Expert Solution

1.

A company expects to collect from Accounts Receivable

net realizable value of Accounts Receivable or gross amount of Accounts Receivable minus Allowance for Uncollectible Accounts.

Hence, both the statements given in B and C are correct.

Correct option is (D) i.e. both B and C

2.

year 2018

Liquid assets = Accounts Receivable, net + Cash and Cash Equivalents + Short-Term Investments

= 49,000 + 70,000 + 44,000

= $163,000

Current liabilities = Accounts Payable + Income Taxes Payable

= 80,000 + 5,000

= $85,000

Quick ratio = Liquid assets/Current liabilities

= 163,000/85,000

= 1.92

year 2019

Liquid assets = Accounts Receivable, net + Cash and Cash Equivalents + Short-Term Investments

= 42,300 + 43,700 + 27,000

= $113,000

Current liabilities = Accounts Payable + Income Taxes Payable

= 76,500 + 2,000

= $78,500

Quick ratio = Liquid assets/Current liabilities

= 113,000/78,500

= 1.44

quick ratio did not improve from 2018 to 2019 since it declined from 1.92 to 1.44

Correct option is (A) No

ekkarill92 answered 8 months ago

Solstice Company determines on October 1 that it cannot collect $63,000 of its accounts receivable from...

Solstice Company determines on October 1 that it cannot collect $63,000 of its accounts receivable from its customer, P. Moore. Apply the direct write-off method to record this loss as of October 1. Record the write off an account. Record the write off an account. Date General Journal Debit Credit Oct 01 Prepare journal entries for the following credit card sales transactions (the company uses the perpetual inventory system). Sold $32,000 of merchandise, which cost $24,600, on Mastercard credit cards....

What is the value of Accounts Receivable, Gross at the beginning and the ending of the...

What is the value of Accounts Receivable, Gross at the beginning and the ending of the current fiscal year? Any examples?

Task 3 Accounts receivable is the amount owed to a company resulting from the company providing...

Task 3 Accounts receivable is the amount owed to a company resulting from the company providing goods and/or services on credit. The term trade receivable is also used in place of accounts receivable. The amount that the company is owed is recorded in its general ledger account entitled Accounts Receivable. Required: With reference to Accounts for Receivables: (2.5X2=5 Marks) Explain with example the concept of Credit Terms. Explain what factors should be considered while deciding whether to relax credit terms...

The following information relates to a company's accounts receivable: gross accounts receivable balance at the beginning...

The following information relates to a company's accounts receivable: gross accounts receivable balance at the beginning of the year, $420,000; allowance for uncollectible accounts at the beginning of the year, $31,000 (credit balance); credit sales during the year, $1,550,000; accounts receivable written off during the year, $22,000; cash collections from customers, $1,600,000. Assuming the company estimates bad debts at an amount equal to 2% of credit sales. 1. Calculate bad debt expense for the year. 2. Calculate the year-end balance in the...

The following information relates to a company’s accounts receivable: gross accounts receivable balance at the beginning...

The following information relates to a company’s accounts receivable: gross accounts receivable balance at the beginning of the year, $300,000; allowance for uncollectible accounts at the beginning of the year, $25,000 (credit balance); credit sales during the year, $1,500,000; accounts receivable written off during the year, $16,000; cash collections from customers, $1,450,000. Assuming the company estimates that future bad debts will equal 10% of the year-end balance in accounts receivable. 1. Calculate bad debt expense for the year. ( Please...

Distinguish the accounts receivable from the revenue cycle. What are the steps in managing accounts receivable?...

Distinguish the accounts receivable from the revenue cycle. What are the steps in managing accounts receivable? Explain each step.

March 11 Dexter determines that it cannot collect $9,200 of its accounts receivable from Leer Co....

March 11 Dexter determines that it cannot collect $9,200 of its accounts receivable from Leer Co. 29 Leer Co. unexpectedly pays its account in full to Dexter Company. Dexter records its recovery of this bad debt. Prepare journal entries to record the above transactions. Record write off of Leer Co. account. Date General Journal Debit Credit Mar 11 Record the reinstatement of an account previously written off. Date General Journal Debit Credit Mar 29 Record the cash received on account....

Johnson Company calculates its allowance for uncollectible accounts as 5% of its ending balance in gross accounts receivable.

Exercise 7-11 (Algo) Uncollectible accounts; allowance method vs. direct write-off method [LO7-5, 7-6) Johnson Company calculates its allowance for uncollectible accounts as 5% of its ending balance in gross accounts receivable. The allowance for uncollectible accounts had a credit balance of $20,000 at the beginning of 2021. No previously written-off accounts receivable were reinstated during 2021. At 12/31/2021, gross accounts receivable totaled $333,400, and prior to recording the adjusting entry to recognize bad debts expense for 2021, the allowance for uncollectible...

What is accounts receivable? What is notes receivable and how are they different than accounts receivable?...

What is accounts receivable? What is notes receivable and how are they different than accounts receivable? How do creditors decide to extend credit to their customers? What processes do credit managers use to evaluate new customers? Now explain the allowance for doubtful accounts and provide examples.

What does impairment on Accounts Receivable refer to and how is it different from bad/doubtful debts...

What does impairment on Accounts Receivable refer to and how is it different from bad/doubtful debts and its allowance?