2 the estimated amount that is uncollectible for each

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(2) The estimated amount that is uncollectible for each category and in total. (b) Compute the amount of the year-end adjustment necessary to bring Allowance for Doubt- ful Accounts to the balance indicated by the age analysis. Then prepare the necessary jour- nal entry to adjust the accounting records. (c) In a recessionary environment with tight credit and high interest rates: (1) Identify steps SEK Company might consider to improve the accounts receivable situation. (2) Then evaluate each step identified in terms of the risks and costs involved. Comparative Analysis Problem: PepsiCo, Inc. vs. The Coca-Cola Company BYP9-2 PepsiCo, Inc. ’s financial statements are presented in Appendix A. Financial state- ments of The Coca-Cola Company are presented in Appendix B. FINANCIAL REPORTING AND ANALYSIS 432 Chapter 9 Accounting for Receivables PDF Watermark Remover DEMO : Purchase from to remove the watermark
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Instructions (a) Based on the information in these financial statements, compute the following 2007 ratios for each company. (Assume all sales are credit sales and that PepsiCo’s receivables on its balance sheet are all trade receivables.) (1) Accounts receivable turnover ratio. (2) Average collection period for receivables. (b) What conclusions about managing accounts receivable can you draw from these data? Exploring the Web BYP9-3 Purpose: To learn more about factoring services. Address: , or go to Steps: Go to the website and answer the following questions. (a) What are some of the benefits of factoring? (b) What is the range of the percentages of the typical discount rate? (c) If a company factors its receivables, what percentage of the value of the receivables can it expect to receive from the factor in the form of cash, and how quickly will it receive the cash? Broadening Your Perspective 433 w w w . w i l e y . c o m / c o l l e g e / w e y g a n d t Decision Making Across the Organization BYP9-4 Molly and Joe Mayne own Campus Fashions. From its inception Campus Fashions has sold merchandise on either a cash or credit basis, but no credit cards have been accepted. During the past several months, the Maynes have begun to question their sales policies. First, they have lost some sales because of refusing to accept credit cards. Second, representatives of two metropolitan banks have been persuasive in almost convincing them to accept their na- tional credit cards. One bank, City National Bank, has stated that its credit card fee is 4%. The Maynes decide that they should determine the cost of carrying their own credit sales. From the accounting records of the past 3 years they accumulate the following data. 2010 2009 2008 Net credit sales $500,000 $600,000 $400,000 Collection agency fees for slow-paying customers 2,450 2,500 2,400 Salary of part-time accounts receivable clerk 4,100 4,100 4,100 Credit and collection expenses as a percentage of net credit sales are: uncollectible accounts 1.6%, billing and mailing costs 0.5%, and credit investigation fee on new customers 0.15%.
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