What will be the value of the general receivables provision? £ 906 What will be the irrecoverable debt expense on the P or L? £ 2660 (Enter the values with no E sign, comma or decimal places)
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Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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- The following information was extracted from ABC Ltd’s financial statements for the year ended 31 December 2019. Sales on 30 November 2019 were K100 million and K110 million on 31 December 2019. For the year 2020, sales are expected to double at a constant monthly rate. 80% of the sales made are on account; the remainder on cash. From past experience, 5% of the receivables have turned out to be irrecoverable. Credit customers pay as follows: 75% in the month following the sale; 15% two months after the sale month. Inventory levels are maintained at 20% of the following month’s sales. Accounts payables are at settled at 30 days after purchase. Required: Prepare a collections schedule for the three-month period from January to March 2020.The following information was extracted from ABC Ltd’s financial statements for the year ended 31 December 2019. Sales on 30 November 2019 were K100 million and K110 million on 31 December 2019. For the year 2020, sales are expected to double at a constant monthly rate. 80% of the sales made are on account; the remainder on cash. From past experience, 5% of the receivables have turned out to be irrecoverable. Credit customers pay as follows: 75% in the month following the sale; 15% two months after the sale month. Inventory levels are maintained at 20% of the following month’s sales. Accounts payables are at settled at 30 days after purchase. Required: Prepare a cash forecast for the three-month period from January to March 2020.a. Abc Investment Ltd., plans to borrow Ghc100,000 for a 90-day period from Lloyds Finance Company. Abc investment would repay the principal amount plus Ghc5,000 interest at maturity. Determine and calculate the Annual Percentage Rate of the credit to Abc Company Ltd. b. Belinda Limited has annual credit sales of Ghc5 million and cost of sales of GHC1.8 million. The company’s current assets consist of inventory and trade receivables. Current liabilities consist of accounts payables and an overdraft facility with an average interest rate of 10% per annum. The company gives 60 days credit to its customers and is allowed an average of 30 days credit by trade suppliers. The company has an operating cycle of 90 days. Other relevant information: Current ratio of Ait Ltd 1.5:1 Cost of long-term finance to Ait Ltd is 12% per annum Required: Calculate the, (i) Size of the overdraft of Ait Ltd (ii) Net working capital of the company (iii) Total cost of financing its current assets c.…
- Company is contemplating factoring its accounts receivable. The factor will acquire P250,000 of the company’s accounts receivable every 2 months. An advance of 75 percent is given by the factor on receivables at an annual charge of 18 percent. There is a 2 percent factor fee associated with receivables purchased. What is the cost of the factoring arrangement? choose the letter of the correct answera. P30,000.00b. P33,750.00c. P63,750.00d. P103,000.00e. P125,000.00Bull City Industries is considering issuing a $100,000, 7% note to a creditor on account. Required: a. If the note is issued with a 45-day term, journalize the entries to record (refer to the company's Chart of Accounts for exact wording of account titles): 1. the issuance of the note. 2. the payment of the note at maturity. Assume a 360-day year. b. If the note is issued with a 90-day term, journalize the entries to record (refer to the company's Chart of Accounts for exact wording of account titles): 1. the issuance of the note. 2. the payment of the payment of the note at maturity. Assume a 360-day year.Millennial Manufacturing has net credit sales for 2018 in the amount of $1,433,630, beginning accounts receivable balance of $585,900, and an ending accounts receivable balance of $621,450. Compute the accounts receivable turnover ratio and the number of days sales in receivables ratio for 2018 (round answers to two decimal places). What do the outcomes tell a potential investor about Millennial Manufacturing if industry average is 2.6 times and number of days sales ratio is 180 days?
- Starlight Enterprises has net credit sales for 2019 in the amount of $2,600,325, beginning accounts receivable balance of $844,260, and an ending accounts receivable balance of $604,930. Compute the accounts receivable turnover ratio and the number of days sales in receivables ratio for 2019 (round answers to two decimal places). What do the outcomes tell a potential investor about Starlight Enterprises if the industry average is 1.5 times and the number of days sales ratio is 175 days?Canucks plc has trade receivables of £424,400 at 31 December 2021. At 31 December 2020 the allowance for doubtful debts was £10,600.For 31 December 2021, the accountant wants the allowance for doubtful debts to be 4% of trade receivables. What is the charge to profit and loss account for 31 December 2021?a) £6,376b) £16,796cc) £27,576 d) £10,600Bull City Industries is considering issuing a $100,000, 7% note to a creditor on account.a. If the note is issued with a 45-day term, journalize the entries to record:1. the issuance of the note.2. the payment of the note at maturity.b. If the note is issued with a 90-day term, journalize the entries to record:1. the issuance of the note.2. the payment of the note at maturity.
- A company has accounts payable of P5,000,000 with terms of 2% discount within 15 days, net 30 days (2/15, net 30). It can borrow funds from a bank at an annual rate of 12%, or it can wait until the 30th day when it will receive revenues to cover the payment. If it borrows funds on the last day of the discount period in order to obtain the discount, its total cost will beYou are presented with the following information extracted from your organisation’s financial statements for the year ended 31 December 2019. Sales on 31 December 2019 were K110 million. For the year 2020, sales are expected to grow at 8% per month for the year. 90% of the sales made are on account; the remainder on cash. Credit customers pay as follows: 85% in the month following the sale; 10% two months after the sale month. Irrecoverable debts are expected at the historical norm of 5% of credit sales. Inventory levels are maintained at 20% of the following month’s sales. Accounts payables are at settled at 30 days after purchase. QUESTION Prepare a cash flow forecast for the three-month period from January to March 2020. 2. Calculate the following for each month of the forecast period: Inventory days Accounts receivable days Accounts receivable days Cash conversion cycle Briefly explain the implication of your assessment in (2) above on the continued…A company received a P 500,000 line of credit from its bank. Some information about the credit line is as follows: Stated interest rate 10% Compensating balance requirement 20% Assuming that the company drew down the entire amount at the beginning of the year, and that the loan is discounted, what is the effective interest rate on the loan?