The following information is available for Bergstrom Inc. and Sineann Inc. at December 31, 2016:

The following information is available for Bergstrom Inc. and Sineann Inc. at December 31, 2016:

Accounts	Bergstrom			Sineann
Accounts receivable	$	56,800		$	80,200
Allowance for doubtful accounts		3,048			2,756
Sales revenue		606,960			887,100

Required

a.	What is the accounts receivable turnover for each of the companies for 2016?

b.

What is the average days to collect the receivables for 2016?
 

c.

Assuming both companies use the percent of receivables allowance method, what is the estimated percentage of uncollectible accounts for each company?
 

Explanation:

a.

Accounts receivable turnover:

Calculate net accounts receivables:

Bergstrom: $56,800 – $3,048 = $53,752

Sineann: $80,200 – $2,756 = $77,444

   

Company	Sales			÷	Accounts Receivable
Bergstrom	$	606,960		÷	$	53,752		=		11.3	times
Sineann	$	887,100		÷	$	77,444		=		11.5	times

b.

Average days to collect accounts receivable:

Company	365	÷	Acct. Rec. Turnover
Bergstrom	365	÷	11.3	=	32	days to collect
Sineann	365	÷	11.5	=	32	days to collect

*rounded to the next whole number of days

c.

Bergstrom:	$	3,048		÷	$	56,800		=		5	%
Sineann:	$	2,756		÷	$	80,200		=		3	%

Thank you!

The following post-closing trial balance was drawn from the accounts of Little Grocery Supplier (LGS) as of December 31, 2015:

The following post-closing trial balance was drawn from the accounts of Little Grocery Supplier (LGS) as of December 31, 2015:

  

	Debit			Credit
Cash	$	5,110
Accounts receivable		19,555
Allowance for doubtful accounts				$	2,035
Inventory		23,390
Accounts payable					7,385
Common stock					21,800
Retained earnings					16,835
Totals	$	48,055		$	48,055

 
Transactions for 2016

1.	LGS acquired an additional $9,100 cash from the issue of common stock.
2.	LGS purchased $59,000 of inventory on account.
3.	LGS sold inventory that cost $60,400 for $94,200. Sales were made on account.
4.	The company wrote off $930 of uncollectible accounts.
5.	On September 1, LGS loaned $9,500 to Eden Co. The note had an 6 percent interest rate and a one-year term.
6.	LGS paid $15,450 cash for operating expenses.
7.	The company collected $86,230 cash from accounts receivable.
8.	A cash payment of $45,700 was paid on accounts payable.
9.	The company paid a $4,500 cash dividend to the stockholders.
10.	Accepted credit cards for sales amounting to $3,700. The cost of goods sold was $1,800. The credit card company charges a 5% service charge. The cash has not been received.
11.	Uncollectible accounts are estimated to be 2.5 percent of sales on account.
12.	Recorded the accrued interest at December 31, 2016.

Required
a.	Record the above transactions in general journal form.

 
b. Open T-accounts and record the beginning balances and the 2016 transactions. 


c. Prepare an income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for 2016.



Thank you!