1 - Use the information below for Privett Company to answer the question that fo
ID: 2537370 • Letter: 1
Question
1 - Use the information below for Privett Company to answer the question that follow.
Based on the data for Privett Company, what is the amount of working capital?
a.$213,000
b.$39,000
c.$113,000
d.$153,000
2 -
Based on the following data for the current year, what is the number of days' sales in inventory (rounded to one decimal place)? Assume 365 days a year.
a.175.8
b.96.4
c.87.9
d.79.4
Privett Company Accounts payable $ 30,000 Accounts receivable 35,000 Accrued liabilities 7,000 Cash 25,000 Intangible assets 40,000 Inventory 72,000 Long-term investments 100,000 Long-term liabilities 75,000 Marketable securities 36,000 Notes payable (short-term) 20,000 Property, plant, and equipment 400,000 Prepaid expenses 2,000Explanation / Answer
1
Working capital = current assets-current liabilities
Current assets
Accounts receivable
$35,000
Cash
$25,000
Inventory
$72,000
Marketable securities
$36,000
Prepaid expenses
$2,000
Total (A)
$170,000
Current Labilities
Accounts payable
$30,000
Accrued liabilities
$7,000
Notes payable (short-term)
$20,000
Total (B)
$57,000
Ans
Working capital (A-B)
$113,000
Option (C) $113,000
2
Number of days' sales in inventory = Average inventory / Average daily cost of goods sold
Average inventory = ($35,488+$43,106)/2 = $39,297
Average daily cost of goods sold = $163,217/365 = $447.17
Ans
Number of days' sales in inventory = $39,297/$447.17 = 87.9
Option (C) 87.9 is correct
1
Working capital = current assets-current liabilities
Current assets
Accounts receivable
$35,000
Cash
$25,000
Inventory
$72,000
Marketable securities
$36,000
Prepaid expenses
$2,000
Total (A)
$170,000
Current Labilities
Accounts payable
$30,000
Accrued liabilities
$7,000
Notes payable (short-term)
$20,000
Total (B)
$57,000
Ans
Working capital (A-B)
$113,000
Option (C) $113,000
2
Number of days' sales in inventory = Average inventory / Average daily cost of goods sold
Average inventory = ($35,488+$43,106)/2 = $39,297
Average daily cost of goods sold = $163,217/365 = $447.17
Ans
Number of days' sales in inventory = $39,297/$447.17 = 87.9
Option (C) 87.9 is correct
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