The following information was available for the year ended December 31, 2016: Ne
ID: 2519084 • Letter: T
Question
The following information was available for the year ended December 31, 2016: Net sales $ 438,000 Cost of goods sold 350,400 Average accounts receivable for the year 29,200 Accounts receivable at year-end 33,600 Average inventory for the year 116,800 Inventory at year-end 110,400
Required: (show all work)
(a.) Calculate the inventory turnover for 2016.
(b.) Calculate the number of days' sales in inventory for 2016, using year-end inventories.
(c.) Calculate the accounts receivable turnover for 2016.
(d.) Calculate the number of days' sales in accounts receivable for 2016, using year-end accounts receivable.
The following Information was available for the year ended December 31, 2016: Net sales Cost of goods sold Average accounts receivable for the year Accounts receivable at year-end Average inventory for the year Inventory at year-end $438,000 350,400 29,200 33,600 116,800 110,400Explanation / Answer
Answer a.
Inventory Turnover = Cost of Goods Sold / Average Inventory
Inventory Turnover = $350,400 / $116,800
Inventory Turnover = 3.00 times
Answer b.
Number of days’ sales in Inventory = 365 * Inventory at year-end / Cost of Goods Sold
Number of days’ sales in Inventory = 365 * $110,400 / $350,400
Number of days’ sales in Inventory = 115 days
Answer c.
Accounts Receivable Turnover = Net Sales / Average Receivable
Accounts Receivable Turnover = $438,000 / $29,200
Accounts Receivable Turnover = 15 times
Answer d.
Number of days’ sales in Accounts Receivable = 365 * Accounts Receivable at year-end / Net Sales
Number of days’ sales in Accounts Receivable = 365 * $33,600 / $438,000
Number of days’ sales in Accounts Receivable = 28 days
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