Lewis Corporation experienced a fire on December 31, 2015, in which its financia

Question

Lewis Corporation experienced a fire on December 31, 2015, in which its financial records were partially destroyed. It has been able to salvage some of the records and has ascertained the following balances December 31, 2015 $30,000 85,000 200,000 50,000 30,000 400,000 130,000 December 31, 2014 Cash Receivables (net) Inventory Accounts payable Notes payable Common stock, $100 par Retained earnings $10,000 125,000 180,000 90,000 60,000 400,000 101,000 Additional information 1. The inventory turnover is 5 times 3. 4. 5. The return on common stockholders' equity is 20%. The company had no additional paid-in capital The accounts receivable turnover is 9 times The return on assets is 16% Total assets at December 31, 2014, were $685,000 Instructions Compute the following for Lewis Corporation (a) Cost of goods sold for 2015 (b) Net sales (credit) for 2015

Explanation / Answer

a) Inventory turnover = Cost of goods sold/average inventory

5 = X/190000

Cost of goods sold = 950000

b) Account receivable turnover = Net credit sales/average receivables

9 = X/105000

Net credit sales = 945000

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