he following information is available for Market, Inc. and Supply, Inc. at December 31: Accounts Market, Inc. Supply, Inc. Accounts receivable $ 58,000 $ 77,800 Allowance for doubtful accounts 2,548 2,256 Sales revenue 636,960 887,100 Required a. What is the accounts receivable turnover for each of the companies

Please see answer below

Explanation:

Note: The questions are incomplete as only question 'a' was given. However, other parts of the questions have been retrieved hence answered below.

a. Accounts receivable turnover for each of the companies

Market Inc.

Accounts receivables $58,000

(-) Allowance for doubtful accounts $2,548

Net accounts receivables $55,452

Accounts receivable turnover = Company sales revenue / Net accounts receivable

= $636,960 / $55,452

= 11. 5 times

Supply Inc

Accounts receivables $77,800

(-) Allowance for doubtful accounts $2,256

Net accounts receivables $75,544

Accounts receivable turnover = Company sales revenue / Net accounts receivables

= $887,100 / $75,544

= 11.7 times

b. What is the average days to collect the receivables.

Market Inc.

Average collection period = 365 days / Accounts receivable turnover

= 365 / 11.5

= 32 days

Supply Inc

Average collection period = 365 days / Accounts receivable turnover

= 365 / 11.7

= 31 days

c. Assuming both companies use the percentage of receivables Allowance method, what is the estimates percentage of uncollectible accounts for each company.

Market Inc

Estimated percentage of uncollectible accounts = Company allowance for doubtful accounts / Accounts receivable

= $2,548 / $58,000

= 4%

Supply Inc.

Estimated percentage of uncollectible accounts = Company allowance for doubtful accounts / Accounts receivable

= $2,256 / $77,800

= 3%.

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