Problem 3 To create the allowance:

Uncollectible accounts expense

To find the % of provision for uncollectible accounts: Allowance for doubtful accounts

Balance sheet presentation:

Cash
d. Net A/R 16849 (82/16931)*100 = 0,48% A/R
Allowance 82
Total A/R 16931 (Allowance/Total A/R)*100 = % of uncollectible A/R

Allowance Uncoll. Accounts 50

A/R 50
(write off uncollectible A/R from company records)

a. Define financial assets: assets that can be sold inmediately and turned into cash.

b. Why do companies like Apple Inc. hold so much of their financial assets in the form of marketable securitie

Companies like Apple have excess cash and should invest it. They also have high volume of A/R and sales.

c. What types of investments might Apple Inc. own that are considered cash equivalents?

Mostly cash equivalents would consist of shares expected to b sold in less than 90 days.

Operating cycle = Days to sell inventory + days to collect A/R

 82
e for doubtful accounts 82

16849 (16931-82)

form of marketable securities and receivables?

me of A/R and sales.

 Problem 4

Operating cycle = Days to sell inventory + days to collect A/R

A/R turnover rate = indicates how many time in one year the company collects all its A/R

a. Compute A/R turnover rate for the year

A/R turnover = Net sales/Average A/R

Goodyear A/R turnover = 18,1/2,3 = 7,87 times

b. Days to collect A/R = 360/7,87 = 46 days to collect A/R

PPL

A/R turnover = 11,500/923 = 12,46 times a year

b. Days to collect A/R = 360/12,46 = 29 days

c. Since Goodyear is company with larger amount of sales,it

have more A/R and it would take them longer time to collect their cash.
 Prob.5

Write-off of A/R

Jan.11 Allowance for Doubtful acccoun 3400

A/R 3400

b. Jan.10 220000 7200

-7200 -3400
Net value 212800 3800

Jan.11 216600 220000 -3400 216600

-3800
Net value 212800