Renfro Company Had Accounts Receivable of $100,000 on January 1

question 135

Essay

Renfro Company had accounts receivable of $100,000 on January 1, 2015. The only transactions that affected accounts receivable during 2015 were net credit sales of $1,200,000, cash collections of $1,000,000, and accounts written off of $30,000.
Instructions
(a) Compute the ending balance of accounts receivable.
(b) Compute the accounts receivable turnover for 2015.
(c) Compute the average collection period in days.

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Definitions:

Excess Production

The situation where more units of a product are produced than are demanded, often resulting in surplus inventory.

Economic Theory

Economic theory encompasses models and principles that explain the functioning of economies, markets, and the behavior of economic agents. It seeks to understand how resources are allocated, prices are set, and wealth is distributed.

Demand Curves

Graphical representations showing the relationship between the price of a good and the quantity demanded, typically downward sloping.

Monopolistically Competitive

A scenario where numerous companies compete in the same industry by offering slightly unique products or services, giving consumers choices.