Business, 25.06.2020 04:01 carlosd21151

On January 1, 2018, the general ledger of 3D Family Fireworks includes the following account balances: Accounts Debit Credit
Cash 24,700
Accounts Receivable 14,000
Allowance for Uncollectible Accounts 1,600
Supplies 2,900
Notes Receivable (5%, due in 2 years) 24,000
Land 77,400
Accounts Payable 8,600
Common Stock 100,000
Retained Earnings 32,800
Totals 143,000 143,000

During January 2018, the following transactions occur:
January 2 Provide services to customers for cash, $53,100.
January 6 Provide services to customers on account, $90,400.
January 15 Write off accounts receivable as uncollectible, $4,100.
January 20 Pay cash for salaries, $33,200.
January 22 Receive cash on accounts receivable, $88,000.
January 25 Pay cash on accounts payable, $7,300.
January 30 Pay cash for utilities during January, $15,500.

a. At the end of January, $5,400 of accounts receivable are past due, and the company estimates that 20% of these accounts will not be collected. Of the remaining accounts receivable, the company estimates that 5% will not be collected. The note receivable of $24,000 is considered fully collectible and therefore is not included in the estimate of uncollectible accounts.
b. Supplies at the end of January total $900.
c. Accrued interest revenue on notes receivable for January. Interest is expected to be received each December 31.
d. Unpaid salaries at the end of January are $33,900.

Required:
a. Prepare a classified balance sheet as of January 31, 2018.
b. Analyze how well 3D Family Fireworks manages its receivables:
1. Calculate the receivables turnover ratio for the month of January (Hint: For the numerator, use total services provided to customers on account).
2. If the industry average of the receivables turnover ratios for the month of January is 4.3 times, is the company collecting cash from customers more or less efficiently than other companies in the same industry?

c. Calculate the ratio of Allowance for Uncollectible Accounts to Accounts Receivable at the end of January.
d. Based on a comparison of this ratio to the same ratio at the beginning of January, does the company expect an improvement or worsening in cash collections from customers on credit sales?

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On January 1, 2018, the general ledger of 3D Family Fireworks includes the following account balance...

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