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ACC 400 - Hachey Company & Optix International Problem




Question;Hachey Company has accounts receivable of $95,100 at March 31, 2007. An analysisof the accounts shows these amounts.Balance, March 31Month of Sale 2007 2006March $65,000 $75,000February 12,600 8,000December and January 10,100 2,400November and October 7,400 1,100$95,100 $86,500Credit terms are 2/10, n/30. At March 31, 2007, there is a $2,200 credit balance in Allowancefor Doubtful Accounts prior to adjustment. The company uses the percentage ofreceivables basis for estimating uncollectible accountsEstimated PercentageAge of Accounts UncollectibleCurrent 2%1?30 days past due 731?90 days past due 30Over 90 days 50Instructions(a) Determine the total estimated uncollectibles.(b) Prepare the adjusting entry at March 31, 2007, to record bad debts expense.(c) Discuss the implications of the changes in the aging schedule from 2006 to 2007.E9-9 Optix International is considering a significant expansion to its product line. Thesales force is excited about the opportunities that the new products will bring. The newproducts are a significant step up in quality above the company?s current offerings, butoffer a complementary fit to its existing product line. Frank Renolds, senior productiondepartment manager, is very excited about the high-tech new equipment that will have tobe acquired to produce the new products. Carol Fischer, the company?s CFO, has providedthe following projections based on results with and without the new products.Without New Products With New ProductsSales $10,000,000 $18,000,000Net income $800,000 $1,800,000Average total assets $5,000,000 $15,000,000Instructions(a) Compute the company?s return on assets ratio, profit margin ratio, and asset turnoverratio, both with and without the new product line.(b) Discuss the implications that your findings in part (a) have for the company?s decision.


Paper#43294 | Written in 18-Jul-2015

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