a. What is the accounts receivable turnover for each of the companies for 2016?
ID: 2581892 • Letter: A
Question
a.
What is the accounts receivable turnover for each of the companies for 2016? (Round your answers to 1 decimal place.)
b.
What is the average days to collect the receivables for 2016? (Use 365 days in a year. Do not round intermediate calculations. Round your answers to the nearest whole number.)
c.
Assuming both companies use the percent of receivables allowance method, what is the estimated percentage of uncollectible accounts for each company? (Round your percentage answers to nearest whole number.)
The following information is available for Bergstrom Inc. and Sineann Inc. at December 31, 2016:Explanation / Answer
Net Accounts Receivable = Acoounts Receivable - Allowance for doubtful debts
Bergstrom
Net Accounts Receivable = $58,600 - $2,248 = $56,352
Sineann
Net Accounts Receivable = $77,200 - $3,056 = $74,144
a) Accounts receivable turnover = Net Credit Sales / Average Accounts Receivable
Bergstrom
Accounts receivable turnover = $646,960 / $56,352 = 11.5
Sineann
Accounts receivable turnover = $907,100 / $74,144 = 12.2
b)
Average days to collect Receivables = 365 days / Accounts receivable turnover
Bergstrom
Average days to collect Receivables = 365 / 11.5 = 32 days
Sineann
Average days to collect Receivables = 365 / 12.2 = 30 days
c)
Estimated percentage of uncollectible accounts = Allowance for doubtful debts / Accounts Receivable
Bergstrom = $2,248 / $58,600 = 4% (3.84%)
Sineann = $3,056 / $77,200 = 4% ( 3.96%)
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