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    Accounts Receivable Turnover - Statement of Cash Flows

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    Problem 7-3 Accounts Receivable Turnover for Coca-Cola and PepsiCo (p. 355)

    1. Calculate the accounts receivable turnover ratios for Coca-Cola and PepsiCo for 2006.

    Coca-Cola PepsiCo

    Net revenue = $24,088 Net revenue = $35,137
    Acct receivable = $2,587 Acct receivable = $3,725
    $24,088/$2,587 = 9.31 $35,137/$3,725 = 9.43

    2. Calculate the average collection period, in days, for both companies for 2006. Comment on the reasonableness of the collection periods for these companies considering the nature of their business.

    Problem 7-7 Effects of Changes in Receivable Balances on Statement of Cash Flow (p. 356)

    Stegner, Inc.
    Balance Sheet
    For the Year Ended December 31, 2008 and 2007

    12/31/08 12/31/07
    Cash $105,000 $110,000
    Accounts receivable 223,000 83,000
    Notes receivable 95,000 100,000

    Stegner reported net income of $130,000 for 2008. No other current assets or liabilities nor any investing or financing activities.

    1. Prepare Stegner's 2008 statement of cash flows.

    Stegner, Inc.
    Statement of Cash Flow
    For Year Ended December 31, 2008

    Net income $130,000
    Cash 105,000
    Accounts receivable 223,000
    Notes receivable 95,000

    2. Draft a brief memo to the owner to explain why cash decreased during a profitable year.

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    Solution Preview

    See attached file for proper format and formulas.

    1. Calculate the accounts receivable turnover ratios for Coca-Cola and PepsiCo for 2006.
    Coca-Cola PepsiCo

    Net revenue = $24,088 Net revenue = $35,137
    Acct receivable = $2,587 Acct receivable = $3,725
    $24,088/$2,587 = 9.31 $35,137/$3,725 = 9.43

    2. Calculate the average collection period, in days, for both companies for 2006. Comment on the reasonableness of the collection periods for these companies considering the nature of their business.
    average collection ...

    Solution Summary

    Account receivable turnovers for statements of cash flows is determined.

    $2.19