The following information was available for the year ended December 31, 2016: Ne
ID: 2335077 • Letter: T
Question
The following information was available for the year ended December 31, 2016: Net sales $ 821,250 Cost of goods sold 602,250 Average accounts receivable for the year 39,100 Accounts receivable at year-end 30,400 Average inventory for the year 166,000 Inventory at year-end 157,575 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.)
The following information was available for the year ended December 31, 2016: Net sales $ 821,250 Cost of goods sold 602,250 Average accounts receivable for the year 39,100 Accounts receivable at year-end 30,400 Average inventory for the year 166,000 Inventory at year-end 157,575 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.)
The following information was available for the year ended December 31, 2016: Net sales $ 821,250 Cost of goods sold 602,250 Average accounts receivable for the year 39,100 Accounts receivable at year-end 30,400 Average inventory for the year 166,000 Inventory at year-end 157,575 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.)
Explanation / Answer
(a) Inventory Turnover Ratio = Cost of goods sold/Average Inventory
= 602,250/166,000
= 3.63
(b) Days' sales in inventory = (Days in a year x year end inventories)/Cost of goods sold
= (365 x 157,575)/602,250
= 95.5
(c) Accounts Receivables Turnover Ratio = Net credit sales/Average Receivables
= 821,250/39,100
= 21
(d) Days sales in accounts receivable = (Days in a year x Accounts receivable at year end)/Net credit sales
= (365 x 30,400)/821,250
= 13.5
Note: It has been assumed that all sales were credit sales.
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