Question

On December 31, 2017 (the end of its fiscal year), LaCroix reported the following information. Balance Sheets 2019 2018 Current Assets Accounts receivable.net of allowances for doudal accounts of $17,079 and 516,700 $360,271 $315,050 In addition, LaCroix reported sales revenues of $2,017,800 for 2019. All sales are made on a credit hasis (terms, /30). Accounts receivables of $16.200 were written off in 2019 and there were no coveries of accounts receivable previously written off. LaCroix uses an aging approach for the allowance for bad debts. 2. Determine the amount of bad debt expense in 2019. b. Determine average collection period for 2019 and evaluate how well LaCroix managed its receivables in 2019. Receivables turnover Net (credit) sales/Average net accounts receivable Average collection period = 3657 receivables turnover ratio

Answer 1

a)	Closing allowances for doubtful accounts	17079
	Less: Opening Allowances for doubtful Accounts	16700
	Less: bad debt expense written off during 2019	379
	Add: Accounts Receivable written off	16200
	Bad debt expense written off	16579
b)	Receivable Turnover = Net (Credit ) Sales / Average Net Accounts Receivable
	= 2017800/337660.5
	5.976
	Average net accounts receivable = (Opening net accounts receivable + Closing net accounts receivable)/2
	= (360271 + 315050)/2
	337660.5
	Average collection period = 365 / Receivable turnover ratio
	=356 / 5.976
	59.57
	(Approx 60 days)
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