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The following information was available for the year ended December 31, 2016: Net sales $ 949,000 Cost of goods sold 627,800 Average accounts receivable for the year 41,700 Accounts receivable at year-end 26,000 Average inventory for the year 194,000 Inventory at year-end 158,250 Required: a
The following information was available for the year ended December 31, 2016:
| Net sales | $ | 949,000 | |
| Cost of goods sold | 627,800 | ||
| Average accounts receivable for the year | 41,700 | ||
| Accounts receivable at year-end | 26,000 | ||
| Average inventory for the year | 194,000 | ||
| Inventory at year-end | 158,250 | ||
Required:
a. Calculate the inventory turnover for 2016. (Round your answer to 2 decimal places.)
b. Calculate the number of days' sales in inventory for 2016, using year-end inventories. (Use 365 days a year. Round your answer to 1 decimal place.)
c. Calculate the accounts receivable turnover for 2016. (Round your answer to 1 decimal place.)
d. Calculate the number of days' sales in accounts receivable for 2016, using year-end accounts receivable. (Use 365 days a year. Round your answer to 1 decimal place.)
Expert Solution
Answer:
A.
| Inventory turn over ratio = Cost of goods sold / Average inventory |
| $627,800 / $194,000 = 3.24 Times |
B.
| Number of days sales in inventory = Ending inventory / Cost of goods sold * 365 |
| $158,250 / $627,800 * 365 = 92 Days |
C.
| Accounts Receiveble Turnover ratio = Net credit sales / Average accounts Receiveble |
| $949,000/$41,700 = 22.8 Times |
D.
| Number of days sales in receiveble = Year end Accounts Receiveble / Net credit sales *365 |
| $26,000 / $949,000 * 365 = 10 days |
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