Consider the following information: Sales Revenue $600,000 Ending inventory 60,0
ID: 2550700 • Letter: C
Question
Consider the following information:
Sales Revenue
$600,000
Ending inventory
60,000
Cost of Goods Sold
400,000
Beginning inventory
50,000
What is the number of days to sell?
33.5 days
36.5 days
50.2 days
54.8 days
Using the aging method of accounts receivable method, $5,000 of the company’s Accounts Receivable are estimated to be uncollectible. At the end of the year, the balance of Accounts Receivable is $100,000 and the unadjusted credit balance of the Allowance for Doubtful Accounts is $500. Credit sales during the year totaled $150,000. What is the current year’s Bad Debt Expense? ) $4,500
$4,500
$5,000
$7,000
$7,500
Sales Revenue
$600,000
Ending inventory
60,000
Cost of Goods Sold
400,000
Beginning inventory
50,000
Explanation / Answer
What is the number of days to sell?
Ending inventory
$60,000
Beginning inventory
$50,000
Average inventory (A)
$55,000
Cost of Goods Sold
$400,000
Average sales per day (400,000/365) (B)
$1,095.89
Ans
No of days to sell (55,000/1095.89)
50.2 days
Option (C) 50.2 days correct
What is the current year’s Bad Debt Expense?
Estimated receivables uncollectable
$5,000
Less: Allowance for doubtful debts
$500
Bad debt expenses
$4,500
Ans
Option (A) $4,500 is correct
What is the number of days to sell?
Ending inventory
$60,000
Beginning inventory
$50,000
Average inventory (A)
$55,000
Cost of Goods Sold
$400,000
Average sales per day (400,000/365) (B)
$1,095.89
Ans
No of days to sell (55,000/1095.89)
50.2 days
Option (C) 50.2 days correct
What is the current year’s Bad Debt Expense?
Estimated receivables uncollectable
$5,000
Less: Allowance for doubtful debts
$500
Bad debt expenses
$4,500
Ans
Option (A) $4,500 is correct
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