Question 2 a) Canadian Bacon Inc. financial statements are presented in the tabl
ID: 2776182 • Letter: Q
Question
Question 2
a) Canadian Bacon Inc. financial statements are presented in the table below.
Based on the information in the table, and using cost of goods sold and a 365-day year, calculate Days of Sales in Inventory (using cost of goods sold).
Round the answers to two decimal places
Balance Sheet December 31, 2011
Cash and marketable securities
$143,000
Accounts payable
$278,000
Accounts receivable
$354,000
Notes payable
$87,000
Inventories
$672,000
Accrued expenses
$65,000
Prepaid expenses
$12,500
Total current liabilities
$430,000
Total current assets
$1,181,500
Long-term debt
$284,000
Gross fixed assets
$1,675,000
Par value and paid-in-capital
$228,000
Less: accumulated depreciation
$500,000
Retained Earnings
$1,414,500
Net fixed assets
$1,175,000
Common Equity
1,642,500
Total assets
$2,356,500
Total liabilities and owner’s equity
$2,356,500
Income Statement Year of 2011
Net sales (all credit)
$3,136,600.00
Less: Cost of goods sold
$2,195,620.00
Selling and administrative expenses
$345,000.00
Depreciation expense
$146,000.00
EBIT
$449,980.00
Interest expense
$45,300.00
Earnings before taxes
$404,680.00
Income taxes
$161,872.00
Net income
$242,808.00
Answer:
(111.71)
Average Credit Sales per Day
Question 3
a) Canadian Bacon Inc. financial statements are presented in the table below.
Based on the information in the table, and using a 365-day year, calculate Average Credit Sales per Day.
Round the answers to two decimal places
Balance Sheet December 31, 2012
Cash and marketable securities
$198,000
Accounts payable
$288,000
Accounts receivable
$469,000
Notes payable
$65,000
Inventories
$577,000
Accrued expenses
$84,000
Prepaid expenses
$15,700
Total current liabilities
$437,000
Total current assets
$1,259,700
Long-term debt
$237,000
Gross fixed assets
$1,954,000
Par value and paid-in-capital
$199,000
Less: accumulated depreciation
$476,000
Retained Earnings
$1,864,700
Net fixed assets
$1,478,000
Common Equity
2,063,700
Total assets
$2,737,700
Total liabilities and owner’s equity
$2,737,700
Income Statement, Year of 2012
Net sales (all credit)
$7,546,600.00
Less: Cost of goods sold
$6,112,746.00
Selling and administrative expenses
$349,000.00
Depreciation expense
$145,000.00
EBIT
$939,854.00
Interest expense
$49,500.00
Earnings before taxes
$890,354.00
Income taxes
$356,141.60
Net income
$534,212.40
Answer:
(20,675.60)
Days of Sales in Receivables
Question 2
Explanation / Answer
Days of sales in inventory:
= (Ending inventory÷Cost of goods sold)×365
= ($672,000÷$2,195,620)×365
= 111.71 days
Average credit sales per day = Credit sales÷365
= $3,136,600÷365
= $8,593.42
Days sales in receivables = (Accounts receivable÷Annual revenue)x366
= ($469,000÷$7,546,600)×365
= 22.68 days
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