Mgmt 200 Assignment Soln 2-16-11

Mgmt 200 Assignment Soln 2-16-11 - Management 200...

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Management 200 – Introductory Financial Accounting– Spring 2011 Krannert School of Management - Purdue University Solutions to class assignment for February 16, 2011 Additional Perspectives 5-3 Requirement 1 The Buckle shows an increasing trend in net sales for the past three years. Requirement 2 Accounts receivable are reported in the balance sheet in the current asset section. The receivables turnover ratio equals net credit sales divided by average accounts receivable. The net sales amount reported in the income statement includes not only credit sales, but also cash sales. When a company has a large amount of cash sales, net sales will not be a good measure of net credit sales. Therefore, using net sales (instead of net credit sales) to calculate the receivables turnover ratio will overstate a company’s ability to efficiently manage receivables. Requirement 3 The Buckle reports an allowance for uncollectible accounts in the balance sheet. For the most recent year, the amount is $35 thousand. Additional Perspectives 5-1
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This note was uploaded on 02/27/2012 for the course MGMT 200 taught by Professor Greigg during the Spring '08 term at Purdue.

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Mgmt 200 Assignment Soln 2-16-11 - Management 200...

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