Lendell Company has these comparative balance sheet data: LENDELL COMPANY Balanc
ID: 2523456 • Letter: L
Question
Lendell Company has these comparative balance sheet data: LENDELL COMPANY Balance Sheets December 31 2019 2018 Cash Accounts receivable (net) Inventory Plant assets (net) $ 15,000$ 30,000 60,000 50,000 180,000 $345,000 $320,000 $ 50,000 S 60,000 100,000 100,000 120,000 40,000 $345,000 $320,000 70,000 60,000 200,000 Accounts pavable Mortgage payable (15%) Common stock, $10 par Retained earnings 140,000 55,000 Additional information for 2019: 1. Net income was $25,000. 2. Sales on account were $375,000. Sales returns and allowances amounted to $25,000. 3. Cost of goods sold was $198,000. 4. Net cash provided by operating activities was $48,000. 5. Capital expenditures were $25,000, and cash dividends were $10,000.Explanation / Answer
Answer of Part a:
Current Assets = Cash + Accounts Receivable (net) + Inventory
Current Assets = $15,000 + $70,000 + $60,000
Current Assets = $145,000
Current ratio = Current Assets / Current Liabilities
Current Ratio = $145,000 / $50,000
Current Ratio = 2.9:1
Answer of Part b:
Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable)/2
Average Accounts Receivable = ($60,000 + $70,000) /2
Average Accounts Receivable = $65,000
Net Sales = $375,000 - $25,000
Net Sales = $350,000
Accounts Receivable Turnover = Sales / Average Accounts Receivable
Accounts Receivable Turnover = $350,000 / $65,000
Accounts Receivable Turnover = 5.4 times
Answer of Part c:
Average Collection Period = 360days / Accounts Receivable Turnover
Average Collection Period = 360days /5.4 times
Average Collection Period =67 days
Answer of Part d:
Average Inventory = (Beginning Inventory + Ending Inventory) /
Average Inventory = ($50,000 + $60,000) /2
Average Inventory = $55,000
Inventory Turnover = COGS / Average Inventory
Inventory Turnover = $198,000 / $55,000
Inventory Turnover = 3.6 times
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