Question

Chamberlain Enterprises Inc. reported the following receivables in its December 31, 2018, year-end balance sheet:

Current assets: Accounts receivable, net of $38,000 in allowance for uncollectible accounts $ 288,000 Interest receivable 11,300 Notes receivable 400,000

Additional Information:

1.The notes receivable account consists of two notes, a $70,000 note and a $330,000 note. The $70,000 note is dated October 31, 2018, with principal and interest payable on October 31, 2019. The $330,000 note is dated June 30, 2018, with principal and 6% interest payable on June 30, 2019.

2.During 2019, sales revenue totaled $1,480,000, $1,350,000 cash was collected from customers, and $36,000 in accounts receivable were written off. All sales are made on a credit basis. Bad debt expense is recorded at year-end by adjusting the allowance account to an amount equal to 10% of year-end accounts receivable.

3.On March 31, 2019, the $330,000 note receivable was discounted at the Bank of Commerce. The bank's discount rate is 10%. Chamberlain accounts for the discounting as a sale.

Required:
1. Not including sales revenue, what revenue and expense amounts related to receivables will appear in Chamberlain’s 2019 income statement?

2. & 3. What amounts will appear in the 2019 year-end balance sheet for accounts receivable and Calculate the receivables turnover ratio for 2019.

Answer 1