How to solve these? Question 5 a) Canadian Bacon Inc. financial statements are p
ID: 2776237 • Letter: H
Question
How to solve these?
Question 5
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 operating cycle.
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:
(57.14)
Average Day's Purchases
Question 6
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 Day’s Purchases.
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:
(5,615.40)
Days payables outstanding
Question 7
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 Days payables outstanding.
Round the answers to two decimal places
Balance Sheet December 31, 2014
Cash and marketable securities
$132,000
Accounts payable
$399,000
Accounts receivable
$311,000
Notes payable
$98,500
Inventories
$512,000
Accrued expenses
$89,300
Prepaid expenses
$11,300
Total current liabilities
$586,800
Total current assets
$966,300
Long-term debt
$799,400
Gross fixed assets
$2,104,000
Par value and paid-in-capital
$298,000
Less: accumulated depreciation
$398,000
Retained Earnings
$988,100
Net fixed assets
$1,706,000
Common Equity
1,286,100
Total assets
$2,672,300
Total liabilities and owner’s equity
$2,672,300
Income Statement, Year of 2014
Net sales (all credit)
$4,276,600.00
Less: Cost of goods sold
$3,292,982.00
Selling and administrative expenses
$349,000.00
Depreciation expense
$148,000.00
EBIT
$486,618.00
Interest expense
$49,600.00
Earnings before taxes
$437,018.00
Income taxes
$174,807.20
Net income
$262,210.80
Answer:
(46.31)
Cash Conversion Cycle
Question 8
American Bacon Inc. financial statements are presented in the table below.
Based on the information in the table, and using a 365-day year, calculate cash conversion cycle
Round the answers to two decimal places
Balance Sheet December 31, 2010
Cash and marketable securities
$102,000
Accounts payable
$287,000
Accounts receivable
$299,000
Notes payable
$61,200
Inventories
$628,000
Accrued expenses
$51,900
Prepaid expenses
$10,300
Total current liabilities
$400,100
Total current assets
$1,039,300
Long-term debt
$415,000
Gross fixed assets
$1,502,000
Par value and paid-in-capital
$376,000
Less: accumulated depreciation
$312,000
Retained Earnings
$1,038,200
Net fixed assets
$1,190,000
Common Equity
1,414,200
Total assets
$2,229,300
Total liabilities and owner’s equity
$2,229,300
Income statement, Year of 2010
Net sales (all credit)
$6,387,700.00
Less: Cost of goods sold
$4,726,898.00
Selling and administrative expenses
$345,000.00
Depreciation expense
$148,000.00
EBIT
$1,167,802.00
Interest expense
$50,600.00
Earnings before taxes
$1,117,202.00
Income taxes
$446,880.80
Net income
$670,321.20
Answer:
(42.70)
How to solve these?
Question 5
Explanation / Answer
5)
Operating Cycle = Days' Sales of Inventory + Days Sales Outstanding
Use the expanded formula for operating income is as follows:
Operating cycle=365/Purchases*Average inventories+365/Credit sales*Average accounts receivable
=365/6,017,746*624,500 + 365/7,546,600*411,500
=38 days+20 days
=58 days
Thus, the operating cycle is 58 days.
Computation of purchases:
Opening stock +Purchase-Closing stock =Cost of goods sold
=672,000+Purchases-577,000=6,112,746
Purchases=6,017,746
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