Chapter 8 Homework - 5 Accelerate cash receipts from...

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Nicholas Kuras Q2-4, 7, 12, 14-18, 21 | P4A, 7A, 9A 2) Interest receivable, loans, advances, income taxes refundable 3) Companies estimate uncollectable receivables and match them against revenues Companies put uncollectables as a debit to Bad Debts Expense and a credit to Allowance for Doubtful Accounts Companies debit uncollectibles to Allowance for Doubtful Accounts and credit to Accounts Receivable 4) That is because it is put into a different account 7) They are recorded into a special account. The disadvantage is that you don’t know easily where those uncollected receivables come from, and they’re not recorded at the same time, so you show large gains, then losses. 12) Negotiate or simply write it off. 14) 1. Determine to whom to extend credit 2. Establish a payment period 3. Monitor collections 4. Evaluate the liquidity of receivables
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Unformatted text preview: 5. Accelerate cash receipts from receivables when necessary 15) Prepare schedules, monitor receipts 16) Threat of non-payment from someone who owes a large amount that could hurt the company if not paid 17) No. Look at the receivables turnover rate 18) The new sales director is giving people longer to pay. This means that sales may be reported during one month, but there may be no payment for the goods made during that period, which will cause losses to be reported the following month if no payment is made. 21) Easy source of cash 4A) a) $41,000 b) $22,000 c) $24,000 d) You may write off more than is necessary, which will mess up the books 7A) Transactio n Current Ratio Turnove r Perio d 1 I I I 2 D NE I 3 NE NE D 4 I I NE 9A) Nike Adidas Turnover Rate 3.25 3.92 Period 112.16 93.13...
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Chapter 8 Homework - 5 Accelerate cash receipts from...

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