DECISION CASE 7-1:

1 & 2.

ACCOUNT 2010 2009

Receivables (net of 6539 5197
allowances)
Doubtful accounts balance 246 121
Net realizable value 6293 5076

3. The increase in allowance for the year 2010 might have been caused due to a greater
number of customers failing to pay the receivables. This might have increased the
receivables average and thus, increasing the allowance value.

The decrease in allowance can be caused when customers pay in time or the receivable
collection department is effective.

The net increase in account is due to a higher receivable value that is still pending, and is to
be paid by the customers. It would increase when the receivables are high and allowances
are low

DECISION CASE 3-2:

ACCOUNTS RECEIVABLE TURNOVER = NET CREDIT SALES / AVERAGE ACCOUNT RECEIVABLES

AVERAGE TIME TO COLLECT ACCOUNTS RECEIVABLE = 365/ ACCOUNTS RECEIVABLE TURNOVER

KELLOGS GENERAL MILLS

Average Accounts Receivable 1141.5 997.2
Net Sales 12397 14796.5
Accounts receivable turnover 10.86 14.83
Average time to collect 33.6 24.61
Accounts receivable(days)

Accounts receivable turnover for Kellogg is 10.86 and for General Mills is 14.83. This means the
receivables are collected on average of 33.6 days and 24.61 days repetitively for both firms. This
implies General Mills turnover is faster than Kellogg which results in fewer days to collect
receivables.

DECISION CASE 8-1:

1) List includes Land, building, Buildings under capital lease, Equipment, Equipment under
capital lease, Capitalized software, Construction in progress under Property and Equipment
category of its financial statements

2) General Mills uses straight line method to depreciate operating assets

3) The estimated useful life of operating assets is 3 to 10 years

4) The accumulated depreciation for financial year 2010 is -3822 Million $. The book value of
property and equipment is $3127.7 Million

5) In recent financial year 2010, Assets (land, buildings, and equipment) were purchased. This is
understandable by viewing the consolidated statements of cash flows which shows company
has spent $649.9 million to purchase the assets