Chien Corporation is a recently formed business selling the “World’s Best Doormat.” The corporation is selling doormats faster than Chien can make them. It has been selling the product on a credit basis, telling customers to “pay when they can.” Oddly, even though sales aretremendous, the company is having trouble paying its bills.
Instructions
Write a memo to the president of Chien Corporation discussing these questions:
(a) What steps should be taken to improve the company’s ability to pay its bills?
(b) What accounting steps should be taken to measure its success in improving collections and in recording its collection success?
(c) If the corporation is still unable to pay its bills, what additional steps can be taken with its receivables to ease its liquidity problems?
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> On January 10, 2017, Masterson Co. sold merchandise on account to Tompkins for $8,000, terms n/30. On February 9, Tompkins gave Masterson Co. a 7% promissory note in settlement of this account. Prepare the journal entry to record the sale and the settlem
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> In its first month of operations, McLanie Company made three purchases of merchandise in the following sequence: (1) 300 units at $6, (2) 400 units at $8, and (3) 500 units at $9. Assuming there are 200 units on hand at the end of the period, compute the
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