Sellograph Corporation reports sales of$10M for 20% of Sel!ograph\' Year 2, with

Question

Sellograph Corporation reports sales of$10M for 20% of Sel!ograph' Year 2, with a gross profit margin of 40% s sales are on credit. ales (12) tom Year 1 Year 2 S 150.000 $ 170,000 900,000 1,000,000 1,100,000 1.200.000 Inventory Accounts payable 15. Accounts receivable days outstanding at the end of Year 2 is closest to: 30.6 days B. 28.8 days C. 27.0 days D. 6.1 days 20 10-^¥ 16. Accounts payable days outstanding at the end of Year 2 is closest to: A 57.0 days B. 69.0 days C: 72.0 days D. 43.2 days Co 1000k 10-4

Explanation / Answer

Accounts Payable days Outstanding = Days in a year/Payable turnover for the period = 365 /                    5.30 =                    69 Days Payable turnover = Purchases/Average Payable = $ 61,00,000 / $     11,50,000 =                5.30 Average Payable = (1100000+1200000)/2 = $     11,50,000 Purchases = Cost of good sold+Ending Inventory-Beginning Inventory = $     60,00,000 + $ 10,00,000 - $ 9,00,000 = $     61,00,000 Cost of good sold = Sales -Gross Profit = $ 1,00,00,000 - (10000000*40%) = $ 1,00,00,000 - $ 40,00,000 = $     60,00,000

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