Mike Horn Company manufactures sweatshirts on the market to athletic-wear retailers. The next info was accessible for Horn for the years ended December 31, 2011 and 2012.December 31, December 31,2011 2012Money $ 20,000 $ 15,000Accounts receivable 40,000 ? Allowance for uncertain accounts 5,500 ?Inventories 85,000 80,000 Present liabilities 80,000 86,000Complete credit score gross sales 480,000 550,000Collections on commerce accounts receivable 440,000 500,000Throughout 2010, Horn had the next transactions.1. On June 30, gross sales of $50,000 to a significant buyer had been settled, with Horn accepting a 1-year $50,000 observe bearing 11% INTEREST, payable at maturity.2. 2. Horn components some accounts receivable on the finish of the 12 months. Accounts totaling $47,700 are transferred to First Elements, Inc. with recourse. First Elements will obtain the collections from Horn clients and retain 6% of the balances. Horn is assessed a finance cost of four% on this switch. The truthful worth of the recourse obligation is $four,000.three. three. On the premise of the newest accessible info, the 2010 provision for unhealthy DEBTS is estimated to be zero.8percentof credit score gross sales. Horn charged off as uncollectible, accounts with balances of $2,300.- Based mostly on the above transaction, decide the steadiness for Commerce Accounts Receivable and the Allowance for Uncertain Account on December 31, 2010.- Put together the present property part of Hornâs steadiness sheet at December 31, 2010. The money steadiness at December 31, 2010, displays the next gadgets; checking account $9600; postage stamps $100; petty money $300; CURRENCY $3000; clients checks (put up dated) $2000.- Compute the present ratio and the receivables turnover ratio for Horn at December 31, 2010. Use these measures to investigate Hornâs liquidity. The receivables turnover ratio in 2009 was 10.37.- Talk about how the evaluation above could be affected if Horn had transferred the receivables in a secured borrowing transaction.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
