15. Bates Corporation has issued common stock only. The company has been success
ID: 2556121 • Letter: 1
Question
15. Bates Corporation has issued common stock only. The company has been successful and has a gross profit rate of 20%. The information shown below was taken from the company's financial statements.
Beginning inventory $ 482,000
Purchases 4,036,000
Ending inventory ?
Average accounts receivable 800,000
Average common stockholders' equity 3,500,000
Sales (all on credit) 5,000,000
Net income 385,000
Instructions
Compute the following:
Accounts receivable turnover and days sales in receivables.
(Check Figures: Accounts Receivable Turnover = 6.25 times, days sales in receivables = 58.4 days)
Explanation / Answer
Account receivable turnover = Credit sales/average receivable
= 5000000/800000
= 6.25
days sales in receivables = A/R/credit sales * 365
= (800000/5000000)* 365
= 58.4 Days
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