Question 49 1. Given below are comparative balance sheets and an income statemen
ID: 2444527 • Letter: Q
Question
Question 49
1. Given below are comparative balance sheets and an income statement for Namekagon Corporation.
Eleva Corporation balance Sheets - 2011
Eleva Corporation Income Statement - 2011
Dec. 31
1-Jan
For the year ended 2011
Cash
$31,200
$31,200
Sales
$457,600
Accounts receivable
93,600
75,400
Cost of Goods Sold
-275,080
Inventory
65,000
72,800
Gross profit on sales
$182,520
Equipment (net)
114,400
132,600
Operating expenses
-151,736
$304,200
$312,000
Operating Income
$30,784
Accounts Payable
52,000
57,200
Interest Expense and income taxes
-18,200
Dividends payabl
15,600
7,800
Net income
12,584
Long Term note payable
28,600
28,600
Capital Stock $5 par
145,600
145,600
Retained Earnings
62,400
72,800
$304,200
$312,000
All sales were made on account. Cash dividends declared during the year totaled $11,492.
Eleva Corporation's inventory turnover for 2011 is closest to:
A.
6.67 times
B.
3.99 times
C.
4.15 times
D.
94 days
Eleva Corporation balance Sheets - 2011
Eleva Corporation Income Statement - 2011
Dec. 31
1-Jan
For the year ended 2011
Cash
$31,200
$31,200
Sales
$457,600
Accounts receivable
93,600
75,400
Cost of Goods Sold
-275,080
Inventory
65,000
72,800
Gross profit on sales
$182,520
Equipment (net)
114,400
132,600
Operating expenses
-151,736
$304,200
$312,000
Operating Income
$30,784
Accounts Payable
52,000
57,200
Interest Expense and income taxes
-18,200
Dividends payabl
15,600
7,800
Net income
12,584
Long Term note payable
28,600
28,600
Capital Stock $5 par
145,600
145,600
Retained Earnings
62,400
72,800
$304,200
$312,000
Explanation / Answer
Ans) B) 3.99 times Inventory Turnover ratio = (Cost of Good sold) / (Average invetory) Average Invetory = (Opening invetory + Closing inventory) /2 (65000+72800)/2 68900 Cost of goods sold = 275080 Inventory Turnover ration = 275080/68900 = 3.99245283 Times
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