Consider the following financial statement information for the Zacee Corporation
ID: 2716322 • Letter: C
Question
Consider the following financial statement information for the Zacee Corporation for 2013:
Items
Beginning
Ending
Inventory
$7,708
$7,866
Accounts Receivable (A/R)
$87,309
$92,819
Accounts Payable (A/P)
$19,531
$20,035
Credit Sales
$144,077
Cost of Goods Sold (COGS)
$126,215
What is the operating cycle?
80 days
251 days
285 days
308 days
193 days
Items
Beginning
Ending
Inventory
$7,708
$7,866
Accounts Receivable (A/R)
$87,309
$92,819
Accounts Payable (A/P)
$19,531
$20,035
Credit Sales
$144,077
Cost of Goods Sold (COGS)
$126,215
Explanation / Answer
Answer - Answer 2 is correct . 251 days.
Formula of opreating cycle is =
= 365/126215*7787+365/144077*90064
= 250.68 or 251 days
Avg inventory = (opening inventory+closing inventory )/2 = (7708+7866)/2 =7787
Avg receviables = (opening debtors+closing debtors)/2 = (87309+92819)/2 = 90064
365 × Average Inventories + 365 × Average Accounts Receivable Purchases credit salesRelated Questions
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