Calculate accounts receivable turnover and the number of days” sales in accounts receivable and…

Jim Perry operates a large fruit and vegetable stand on the outskirts of a city. In a typical year he sells USD 600,000 of goods to regular customers. His sales are 40 percent for cash and 60 percent on credit. He carries all of the credit himself. Only after a customer has a USD 300 unpaid balance on which no payments have been made for two months does he refuse that customer credit for future purchases. His income before taxes is approximately USD 95,000. The total of uncollectible accounts for a given year is USD 48,000. You are one of Perry”s regular customers. He knows that you are taking a college course in accounting and has asked you to tell him your opinion of several alternatives recommended to him to reduce or eliminate the USD 48,000 per year uncollectible accounts expense. The alternatives are as follows:

•Do not sell on credit.

•Sell on credit by national credit card only.

•Allow customers to charge only until their account balances reach USD 50.

•Allow a bill collector to go after uncollectible accounts and keep half of the amount collected.

Write a report for Perry about the advisability of following any of these alternatives. Annual report analysis C Visit the Internet site: Locate the most recent annual reports of The Coca-Cola Company. Calculate accounts receivable turnover and the number of days” sales in accounts receivable and prepare a written comment on the results.

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