For the year ended December 31, 2018, Alpena Inc. (Alpena) had revenues of $2,456,000 (all on credit).

Question:

For the year ended December 31, 2018, Alpena Inc. (Alpena) had revenues of $2,456,000 (all on credit). Its average collection period of accounts receivable for 2018 was 62 days. Accounts receivable on December 31, 2017 was $420,000. Calculate the effect on the average collection period of accounts receivable and the accounts receivable turnover ratio if the following additional transactions occurred during 2018. Consider the effect of each transaction or economic event separately.

a. Alpena, which uses the percentage-of-credit-sales method of estimating the bad debt expense, wrote off $7,000 of accounts receivable.
b. Alpena collected $80,000 of accounts receivable from customers.

c. Alpena recognized cash revenue of $125,000.

d. Alpena recognized credit revenue of $125,000.

e. Alpena recorded bad debt expense of $5,000.

f. Alpena recorded allowance for sales returns of $7,500

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...