13_Jacobson%20Stores%20Solution%20Guide

13_Jacobson%20Stores%20Solution%20Guide - Jacobson Stores...

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Unformatted text preview: Jacobson Stores Solution Guide ACCOUNTS RECEIVABLE (a) What amount of bad debts did management estimate for fiscal years ending in January 2005 and 2004? Allowance for Doubtful Debts (in thousands) 1/2003 793 ← from notes from notes → Write-off 863 Bad Debt Expense ? 1/2004 773 ← from notes from notes → Write-off 1049 Bad Debt Expense ? 1/2005 750 ← from notes 2004 Bad Debt Expense = End - Beg. + Write-off = 773 - 793 + 863 = 843 2005 Bad Debt Expense = End - Beg. + Write-off = 750 - 773 + 1049 = 1026 (b) Estimate the total amount of cash received from customers during fiscal year 1996 and 1995 from operations. Gross A/R 1/2003 44777 Credit Sales Cash Collections ? 43.6% x 414267 = 180620 Write-offs 863 1/2004 43907 Credit Sales Cash Collections ? 44.6% x 432469 = 192,881 Write-offs 1049 1/2005 42460 End = Beg. + Credit Sales - Cash Collections - Write-offs Beg. + Credit Sales - End - Write-Offs Cash Collections in 2005 = 43907 + 192881 - 42460 – 1049 = 193,279 Cash Collections in 2004 = 44,777 + 180620 - 863 - 43907 = 180,627 Total Cash Receipts in 2005 = Cash Collections from credit customers + Cash Sales = 193279 + (1-.446).432469 = 193279 + 239,588 = 432 867 In 2004 = 180627 + (Cash Sales in 2004 = (1 - .436)(44267 = 233647) = 414274 1 (c) Is management anticipating credit problems amongst its customers? Explain why briefly....
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13_Jacobson%20Stores%20Solution%20Guide - Jacobson Stores...

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