The following information applies to Markham Company assets Cash 6,000 Accounts

Question

The following information applies to Markham Company assets Cash 6,000 Accounts receivable 13,000 Inventory 16,000 Plant and equipment, net 21,000 Land 19,000 Total Assets 75,000 Liabilities and stockholder"s equity Accounts Payable 5,000 Salaries payable 10,000 Bonds payable ( due 2020) 12,000 Capital stock, no par 23,000 Retained earnings 25,000 Total Liab. and stockholder's equity 75,000 Additional information: Net credit sales = $220,000; beginning accounts receivable = $11,000. Required: Compute Markham's a. Quick ratio B. Current ratio C. Working capital D. Accounts receivable turnover e. Average days to collect receivables Round your answer to two decimal places.

Explanation / Answer

a Quick ratio           1.27 (6000+13000)/(5000+10000) b Current ratio           2.33 (6000+13000+16000)/(5000+10000) c Working capital $ 20,000 (6000+13000+16000)-(5000+10000) d Accounts receivable turnover        18.33 220000/((13000+11000)/2) e Average days to collect accounts receivable        19.91 365/18.33

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