Question

In: Accounting

Sales (all on account) $ 773,000 $ 607,000 Cost of goods sold 462,000 402,000 Average inventory...

Sales (all on account)	$	773,000	$	607,000
Cost of goods sold		462,000		402,000
Average inventory during the year		130,000		120,000
Average receivables during the year		150,000		100,000

a-1. Compute the gross profit percentage for both years. (Round your percentage answers to the nearest whole number. i.e. 0.1234 as 12%.)

a-2. Compute the inventory turnover for both years. (Round your answers to 1 decimal place.)

a-3. Compute the accounts receivable turnover for both years. (Round your answers to 1 decimal place.)

b. Which of the following show a positive or negative trend?

a-1. Gross profit percentage

Year 2%

Year 1%

a-2. Inventory turnover times times

Year 2

Year 1

a-3. Accounts receivable turnover times times

Year 2 ,

Year 1

Trend

b. Gross profit rate

Inventory turnover

Accounts receivable turnover

Growth in net sales

Expert Solution

All working forms part of the answer
Answer 1

--- A1

A	Sales (all on account)	$ 773,000.00	$ 607,000.00
B	Cost of goods sold	$ 462,000.00	$ 402,000.00
C = A - B	Gross Profits	$ 311,000.00	$ 205,000.00
D = (C/A) x 100	Gross Profit Rate	40%	34%

---A2

A	Cost of goods sold	$ 462,000.00	$ 402,000.00
B	Average inventory during the year	$ 130,000.00	$ 120,000.00
C = A/B	Inventory Turnover Ratio	3.6 times	3.4 times

---A3

A	Sales (all on account)	$ 773,000.00	$ 607,000.00
B	Average receivables during the year	$ 150,000.00	$ 100,000.00
C = A/B	Account receivable Turnover	5.2 times	6.1 times

Answer 2

Gross Profit Rate shows positive trend.

ekkarill92 answered 2 years ago

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