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Unformatted text preview: During 20X5, net credit sales were $6,000,000. The sales were evenly spread throughout the year. The beginning-of-year net realizable value of accounts receivable was $2,150,000 and the end-of-year balance was $2,650,000. (a) Calculate the "accounts receivable turnover ratio" and the "days outstanding." (b) Evaluate the information from part (a) and determine if Supreme's customer base is in compliance the 4-equal-monthly payments agreement. (c) In addition to the facts above, suppose Supreme ran a major holiday sales campaign in December of 20X5. This campaign promised no payments until 20X6! This campaign generated an additional $3,000,000 in credit sales (and resulted in an end-of-year receivable balance of $5,650,000). Can Supreme record these sales under generally accepted accounting principles, and what is the impact on the ratios (compared to the values you computed in part (a))?...
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This note was uploaded on 02/29/2012 for the course ACCOUNTING 101 taught by Professor Hudack during the Spring '11 term at FIU.
- Spring '11