Problem 8-2A (Part Level Submission) At December r 31, 2016, Indigo Corporation

Question

Problem 8-2A (Part Level Submission) At December r 31, 2016, Indigo Corporation Imports reported this information on its balance sheet. Accounts receivable Less: Allowance for doubtful accounts $652,800 38,030 During 2017, the company had the following transactions related to receivables. 1. 2. 3. 4. Write-offs of accounts receivable deemed uncollectible 5. Recovery of bad debts previously written off as uncollectible Sales on account Sales returns and allowances Collections of accounts receivable $2,883,800 85,386 2,592,000 44,010 14,500

Explanation / Answer

Accounts Receivable Turn Over Annual credit sales (net) / Average accounts receivables (2,883,800-85386) / (652800-38030) 2,798,414/6,14,770                                                                                                              4.55 times Average Collection period 365 / Inventory Turnover ratio 365/4.55                                                                                                                  80 days

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