12. How much was Cash Used in February? a.4260 b. 4720 c. 5440 d. 6200 13. How m
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Question
12. How much was Cash Used in February?
a.4260 b. 4720 c. 5440 d. 6200
13. How much was Cash Received in April?
a.4800 b. 5200 c. 5800 d. 6200
14. What is the Accounts Receivable balance in January?
a.5400 b. 5800 c. 6200 d. 6600
15. What is the Nominal cost of trade credit if the terms are 2/15, net 50 assuming that you forego the discount and pay on the 50th day?
a.13.4% b. 15.8% c. 18.6% d. 21.3%
8. Suppose that Sales for the entire year were $200,000 and Cost of Goods Sold 60% of Sales. The Inventory Balance is $10,000, the Accounts Payable Balance is $5,000, and the Cash Conversion Cycle is 40 days. What is the Inventory Conversion Period?
a.18 b. 24 c. 30 d. 36
Explanation / Answer
Dec Jan Feb March April May Sales 10000 7000 6000 5000 6000 7000 COGS 8000 5600 4800 4000 4800 5600 Cash recd. 4000 7600 6200 5200 5800 6800 Purchases 7040 5280 4480 4320 5120 Cash used 3000 5808 4720 4368 4880 Cash generated by operations 1000 1792 1480 832 920 Cash 1000 2792 4272 5104 6024 Accounts Receivables 6000 5400 5200 5000 5200 Inventory 2800 2480 2160 2480 2800 Accounts payables 4760 4232 3992 3944 4184 Dec missing figures Cash received in Dec= Dec Sales-Dec. A/cs. Receivables= 10000 - 6000= 4000 Cash used in Dec= cash recd- Cash generated by operations= 4000- 1000 =3000 Jan missing figures Closing A/cs. Receivables= Opening A/cs. Receivables+sales- cash recd. = ie. 6000+7000- 7600= 5400 Feb. missing figures Cash recd.= Op.a/cs. Receivables+ Sales- Cl. A/cs.receivables ie. 5400+ 6000- 5200= 6200 Cash used in Feb= Cash recd- Cash generated by operations= 6200- 1480 =4720 14)Accounts Receivable balance in January= 6000+7000-7600 =5400 -Answer (a) 13. Cash Received in April - $ 5800 -Answer-C 12. Cash Used in February- $ 4720 answer-b ( find cash recd, for Feb , then subtract cash generated 15. Nominal cost of trade credit if the terms are 2/15, net 50 assuming that you forego the discount and pay on the 50th day Nominal cost of trade credit = [ Discount percentage / (100- Discount Percentage) ] x [ 365Days / (credit is Outstanding-Discount Period) ] ie. 2/(100-2)*(365/(50-15)) ie. 2/98 * (365/35)= 21.28% ie. 21.3% ANSWER- (d) 8)Value of Inventory 10000 COGS60% of 200000 120000 Cost of sales/day 120000/365 328.7671 Inventory coversion period= Inventory/Salesper day 10000/ 328.7671 30.41667 ANSWER- c- ie. 30 days
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