DuckWing Stores (DWS) reported sales of $620,000 for the year; one-half of sales

Question

DuckWing Stores (DWS) reported sales of $620,000 for the year; one-half of sales were on credit. The average gross profit percentage was 25 percent on sales. Account balances follow:

 

Compute the turnover ratios for accounts receivable and inventory. (Round your answers to 1 decimal place.)

 

 

Calculate the average days to collect receivables and the average days to sell inventory. (Round your answers to 1 decimal place.)

 

  Beginning Ending   Accounts receivable (net) $41,000   $59,000     Inventory 57,000   36,000  

Explanation / Answer

1.Receivable Turnover Ratio = Net Credit Sales/Average Net Receivables $310,000/($41,000+ $59,000/2) $310,000/$50,000 6.2 times Inventory Turnover Ratio = Cost of goods sold/Average Inventory Cost of goods sold = Sales - Gross Profit Gross profit ratio25% on sales = $620,000*25%=$155,000 Cost of goods sold = $620,000 - $155,000 = $465,000 Average Inventory = Beginning Inventory + Ending Inventory/2 Average Inventory = $57,000+$36,000/2 46,500 Inventory Turnover Ratio = Cost of goods sold/Average Inventory $465,000/46,500 10 times 2. Days to collection= Receivable turnove ratio/365 6.3/365days 0.017 Days to sell = Inventory Turn over ratio/365 10/365 0.027

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.