The 2018 income statement of Anderson Medical Supply Company reported net sales
ID: 2331996 • Letter: T
Question
The 2018 income statement of Anderson Medical Supply Company reported net sales of $10 million, cost of goods sold of $5.3 million, and net income of $825,000. The following table shows the company's comparative balance sheets for 2018 and 2017: $ in 000s) 20182017 Assets Cash Accounts receivable Inventory Property, plant, and equipment (net) 400 480 550 950 2.900 2,620 $5,250 $4, 600 800 1,150 Total assets Liabilities and shareholders equity Current 1iabilities Bonds payable Paid-in capital Retained earnings $1,060 930 1,450 1,5001,500 720 $5,250 $4,600 1,450 .240 Total liabilities and shareholders' equity Required 1. Calculate Anderson's turnover ratios for 2018. (Consider 365 days a year. Round your answers to 2 decimal places.) Inventory turnover ratio Receivables turnover ratio Average collection period Asset turnover ratio times times days timesExplanation / Answer
Answer
---Working---
A
Inventory 2017
$ 950,000.00
B
Inventory 2018
$ 1,150,000.00
C = A+B
Total of above
$ 2,100,000.00
D = C / 2
Average Inventory
$ 1,050,000.00
---Answer---
A
Cost of Goods Sold
$ 5,300,000.00
B
Average Inventory
$ 1,050,000.00
C = A/B
Inventory Turnover Ratio
5.05 times
---Working--
A
Accounts receivables 2017
$ 550,000.00
B
Accounts receivables 2018
$ 800,000.00
C = A+B
Total of above
$ 1,350,000.00
D = C / 2
Average accounts receivables
$ 675,000.00
---Answer---
A
Net Sales
$ 10,000,000.00
B
Average accounts receivables
$ 675,000.00
C = A/B
Receivables Turnover ratio
14.81 times
A
No. of days
365
B
Receivables Turnover ratio
14.81 times
C = A/B
Average Collection Period
24.64 days or 25 days
---Working---
A
Total Assets 2017
$ 4,600,000.00
B
Total Assets 2018
$ 5,250,000.00
C = A+B
Total of above
$ 9,850,000.00
D = C / 2
Average Total Assets
$ 4,925,000.00
---Answer---
A
Net Sales
$ 10,000,000.00
B
Average Total Assets
$ 4,925,000.00
C = A/B
Asset Turnover Ratio
2.03 times
A
Inventory 2017
$ 950,000.00
B
Inventory 2018
$ 1,150,000.00
C = A+B
Total of above
$ 2,100,000.00
D = C / 2
Average Inventory
$ 1,050,000.00
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