Exercise 14-5 (Part Level Submission) Selected comparative financial statement d

Question

Exercise 14-5 (Part Level Submission) Selected comparative financial statement data for Bellevue Inc. are shown below BELLEVUE INC. Statement of Financial Position (partial) December 31 (in thousands) 2018 2017 2016 Current assets Cash Held for trading investments Accounts receivable, net Inventory Prepaid expenses $30 90 60 500 574 29 $1,427 $1,311 $1,203 $ 879 $830 750 54 676 626 41 60 580 529 52 Total current assets Total current liabilities Additional information: 2018 2017 2016 (in thousands) Allowance for doubtful accounts $50 $45 $ 40 Net credit sales Cost of goods sold 4,1923,9323,718 2,9082,6672,350

Explanation / Answer

Receivables Turnover = Net Credit sales / Average accounts receivables

Receivables Turnover Ratio 2018 = $ 4192 / [(676+580)/2]

                                                     = $ 4192 / 628

                                                     = 6.67 Times

Receivables Turnover Ratio 2017 = $ 3932 / [(580+500)/2]

                                                     = $ 3932 / 540

                                                     = 7.28 Times

Collection Period = Number of days in a year / Receivables Turnover Ratio

Collection Period 2018 = 365 / 6.67 = 54.7 Days or 55 Days

Collection Period 2017 = 365 / 7.28 = 50.14 Days or 51 Days

“The figure’s I have calculated is almost matching with the the figures you entered in the answer boxes. I think it’s because of rounding differences and that’s why it’s shown as incorrect. All the ratio formulas used above is correct

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ALL THE BEST !!!

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