Answer:
Please see answer below
Explanation:
Note: The questions are incomplete as only question 'a' was given. However, other parts of the questions have been retrieved hence answered below.
a. Accounts receivable turnover for each of the companies
Market Inc.
Accounts receivables $58,000
(-) Allowance for doubtful accounts $2,548
Net accounts receivables $55,452
Accounts receivable turnover = Company sales revenue / Net accounts receivable
= $636,960 / $55,452
= 11. 5 times
Supply Inc
Accounts receivables $77,800
(-) Allowance for doubtful accounts $2,256
Net accounts receivables $75,544
Accounts receivable turnover = Company sales revenue / Net accounts receivables
= $887,100 / $75,544
= 11.7 times
b. What is the average days to collect the receivables.
Market Inc.
Average collection period = 365 days / Accounts receivable turnover
= 365 / 11.5
= 32 days
Supply Inc
Average collection period = 365 days / Accounts receivable turnover
= 365 / 11.7
= 31 days
c. Assuming both companies use the percentage of receivables Allowance method, what is the estimates percentage of uncollectible accounts for each company.
Market Inc
Estimated percentage of uncollectible accounts = Company allowance for doubtful accounts / Accounts receivable
= $2,548 / $58,000
= 4%
Supply Inc.
Estimated percentage of uncollectible accounts = Company allowance for doubtful accounts / Accounts receivable
= $2,256 / $77,800
= 3%.
