Inglewood Industries Has Net Sales of $936,600 and Average Net

question 157

Multiple Choice

Inglewood Industries has net sales of $936,600 and average net receivables of $223,000 for the year.Which of the following statements is correct? (Round all calculations to one decimal place. )

• A)The receivables turnover ratio is 4.2 and the days-to-collect is 0.01.
• B)The receivables turnover ratio is 0.2 and the days-to-collect is 1,520.
• C)The receivables turnover ratio is 4.2 and the days-to-collect is 86.9.
• D)The receivables turnover ratio is 0.2 and the days-to-collect is 87.6.

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Definitions:

Direct Write-off Method

A method of accounting for bad debts where uncollectible accounts are directly written off against income at the time they are deemed non-collectable.

Uncollectible Account

A receivable that a company has not been able to collect from a debtor, leading to its recognition as a bad debt expense on the income statement.

Adjusting Entry

At the conclusion of an accounting cycle, journal entries are documented to distribute earnings and expenditures to the period in which they were genuinely incurred.

Bad Debts Expense

An expense reported on a company's income statement, representing the amount of non-collectable accounts receivable during a period.