Accounting 1 E-40 - how fast that company collects its receivables than Parker’s Therefore Boulder Inc has the better credit management policy E

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khongE 6-40 1. Parker Enterprises, Inc. Year 2 3,875 Accounts receivable turnover = = 2, 20 times (1,725 + 1,800) / 2 365 Average collection period = = 166 days 2, 20 Year 3 3,700 Accounts receivable turnover = = 2, 31 times (1,400 + 1,800) / 2 365 Average collection period = = 158 days 2, 31 Boulder, Inc. Year 2 16,549 Accounts receivable turnover = = 2, 76 times (6,205 + 5,800) / 2 365 Average collection period = = 132 days 2, 76 Year 3 17,825 Accounts receivable turnover = = 3, 15 times (5,800 + 5,525) / 2 365 Average collection period = = 116 days 3, 15 2. In both year 2 and year 3, Boulder, Inc. has the smaller average collection period, the average number of days it takes to collect a credit sale, than Parker
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Enterprises, Inc.’s. It’s also has bigger account receivable turnover, indicating
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Unformatted text preview: how fast that company collects its receivables, than Parker’s. Therefore, Boulder, Inc. has the better credit management policy. E 7-43 Beginning inventory, 60 units at $1350 . ........................................... $81,000 Purchases: 14 units at $1,400 . .......................................................... $19,600 12 units at $1,500 . .......................................................... $18,000 18 units at $1,750 . .......................................................... $31,500 Total purchases (44 units) . .......................................................... $ 69100...
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This note was uploaded on 06/20/2011 for the course ECON 123 taught by Professor Mrews during the Spring '11 term at Korea Advanced Institute of Science and Technology.

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Accounting 1 E-40 - how fast that company collects its receivables than Parker’s Therefore Boulder Inc has the better credit management policy E

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