Unformatted text preview: Stock + Ret. Earn.
- 140 Income Statement: net income decreased by $140
(1) $4,000 x .04 = $160
(2) (160 – 20)
Statement of Changes in Equity: equity decreased Statement of Cash Flows: cash flow was not
affected Selected T-accts for Our Co.
xx beg. bal.
Allow. for Doubt. Acc.
(bal.) 140 Revenue
9,000 Bad Debt Expense
140 Acct. Rec. Efficiencies Ratios
Other things being equal, the less
receivables a company can “carry” and
the more quickly the receivables can be
collected, the better.
Two related ratios help assess how well
receivables are being managed:
Accts. rec. turnover:
Accounts. Av. days to collect:
Av. 365 days
Accts. Rec. Turnover
Accts. Issuing a Note Receivable
On October. 1, 20X1, Our Co. loaned $10,000 to
one of its suppliers by accepting a Note
Receivable. The note carries an interest a
rate of 6%, The lo...
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