Profit and loss account for Lee PLC for year ending December 2011 137,000 Sales

Question

Profit and loss account for Lee PLC for year ending December 2011 137,000 Sales less cost of goods sold Gross profit operating expenses profit before interest and tax less interest 74,000 25,000 49,000 15,000 34,000 5,000 29,000 tax retained profits Balance sheet for Lee PLC as at December 2011 800,000 Fixed assets Current assets inventory (Stock) debtors cash 15,000 10,000 37,678 Liabilities creditors net current assets 15,000 22.678 822,678 542,678 280,000 Capital and reserves Loan Which of the following is the average creditors payment period (days) for Lee pic? Assume all purchases are made on credit and use 365 days. 26.64 days 57.94 days 86.9 days 39.98 days

Explanation / Answer

Average creditors payment period = ( Trade payables / Cost of sales) * 365

= ( 15,000 / 63,000) * 365

= 86.9 days

Average creditors payment period = 86.9 days

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