On January 1, 2014, the Balances in the Accounts Receivable

question 84

Essay

On January 1, 2014, the balances in the Accounts receivable account of Hunter River Inc was
$220,000, and their Allowance for uncollectible accounts, $20,000.During the year Hunter made sales of
$1,400,00,0 of which 80% were on credit; historically, about 2% of what they sell on credit they don't collect.They gave up trying to collect $25,000 worth of accounts during the year, but did successfully collect
$1,100,000.
Required:
A) What are the balances in Hunter's Accounts receivable and Allowance for uncollectibles account at
December 31, 2014? Assume they use the percentage-of-sales method to determine bad debt expense.
B) What was their average collection period for 2014? If their Accounts receivable turnover ratio in 2013 was
5.0, have their collection efforts improved? They normally calculate their ratios using net accounts receivable, because they do not separately disclose their allowance for uncollectibles.

• A) What are the balances in Hunter's Accounts receivable and Allowance for uncollectibles account at
• December 31, 2014? Assume they use the percentage-of-sales method to determine bad debt expense.
• B) What was their average collection period for 2014? If their Accounts receivable turnover ratio in 2013 was
• 5.0, have their collection efforts improved? They normally calculate their ratios using net accounts receivable, because they do not separately disclose their allowance for uncollectibles.

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Definitions:

Marginal Revenue

The additional revenue a firm gains from selling one more unit of a good or service.

Monopolist

A market participant that is the sole seller of a product or service, having significant control over its price.

Demand Curve

illustrates the relationship between the price of a good and the quantity of that good consumers are willing and able to purchase at various prices.

Marginal Cost

The expense incurred in creating an extra single unit of a product or service.