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and patents,
goodwill, prepaid expenses, debtors (people who owe us money), etc. Liability accounts: Accounts payable, salaries and wages payable, income taxes, bank
overdrafts, trust accounts, accrued expenses, sales taxes, advance payments (unearned revenue), debt and accrued interest on debt, etc. Equity accounts: Capital,
drawings, common stock, accumulated funds, etc. Income/Revenue accounts: Services rendered, sales, interest income, membership fees, rent income, interest
from investment, recurring receivables, donation etc. Expense accounts: Telephone, water, electricity, repairs, salaries, wages, depreciation, bad debts, stationery,
entertainme
nt,
honorarium,
rent, fuel,
utility etc.
Notice:
Decreasing COGS from Inventory
Adding the Retain Earning to Equity
ACCOUNT TYPE DEBIT CREDIT
Asset +
Liability +
Income +
Expense +
Equity +
BALANCE SHEET
INCOME STATEMENT
Current Assets
Current Liabilities
Sales Revenue
Cash
Accounts Payable
Interest
Accounts Receivable
Interest Payable
cost of goods sold
Prepaid
Rent/Advertising/Insurance
Notes Payable
GROSS PROFIT
Inventory
Wages Payable
Short Term Notes Receivable
Advances from tenants/customers
Expenses
Interest Receivable
Accrued Expenses/taxes
Operational
Short term Investments
Loans/Mortgage Payable
Rent
Other Current Assets
Depreciation
TOTAL C.L
R&D
Non-current Liabilities
Advertising
TOTAL C.A
Loan
Wages
Mortgage
Total Expenses
Non-current assets
Pension/Long Term Tax Liabilities
Building
Operating income or loss (EBITDA)
Equipment
TOTAL N.C.L
Interest expense
Land
Accumulated Depreciation
TOTAL LIABILITIES
Net Income before taxes (EBIT)
Goodwill
Taxes Expenses
Long Term Investments
Equity
Intangible/Other Assets
Owner's equity
Net Income
Retained Earnings
TOTAL N.C.A
Common Stocks
Preferred Stocks
TOTAL ASSETS
Dividends
Treasury Stock
TOTAL EQUITY
TOTAL LIABILITIES & EQUITY
Ratio
TIE Ratio Operating Income / Interest Expense
Return on Equity Net Income / Shareholder Equity * use the Average for Shareholder Equity
Return on Assets Net Income / Total Assets * use the Average for Total Assets
Debt Ratio Total Liabilities / Total Assets
Debt to Equity Ratio Total Liabilities / Total Equity
Current Ratio Current Assets / Current Liabilities
Quick Ratio (Current Assets - Inventory) / Current Liabilities
Days Sales outstanding Sales / # of shares Outstanding
Earnings Per Share Net Income / # of Share outstanding
Gross Profit Margin Gross Profit / Net Revenue
Inventory Turns Cost of Goods Sold / Inventory * use Average for Inventory
Inventory Days Average Inventory / Daily COGS
Bad debt Expense & Allowance for Doubtful Accounts
Sansome company has reported the following net Accounts receivable for
the past 2 years:
2013 2012
Accounts Receivable, net
14,250
12,875
The following information comes from the notes of Sansome Company's
latest annual report (10k):
Allowance for Doubtful
Accounts 2013 2012 2011
Beginning Balance 34 30 25
Additions to Bad Debt
Provision 15 12 10
Deductions, net of
recovery -9 -8 -5
Ending Balance 40 34 30
a. What is the Gross Accounts Receivable for 2013 and 2012?
2013 2012
Gross Accounts Receivable
14,290
12,909 EndinBala+net
b. What is the % of uncollectible accounts for 2013 and 2012?
2013 2012
% of uncollectible
accounts 0.28% 0.26% EndinBala/Gross
c. What was the bad debt expense for 2013, 2012 ,and 2011 and what was
the total for all three years?
d. What were the write-offs for Account Receivable for 2013, 2012, 2011?
2013 2012 2011 Total
Bad Debt Expense 15 12 10 37
Write-offs to AR -9 -8 -5 -22
Year
Cash
Collections
($M)
Cost
Incurred % of costs
Revenue
Recognized
Net
Income
2007 30 15 17.65% 21.2 6.2
2008 50 40 47.06% 56.5 16.5
2009 40 30 35.29% 42.4 12.4
120 85 100.00% 120.0 35.0
Percentage of Completion Method