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Universal calendar company began the year with accounts receivable (net) and inventory balances of $240000 and...

Universal calendar company began the year with accounts receivable (net) and inventory balances of $240000 and 95000 respectively. Year-end for these accounts were $ 260000 and 75000 respectively. Sales for the year of 950000 generated a gross profit of 230000

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Expert Solution

  • All working forms part of the answer
  • Working #1

A

Sales

$                950,000.00

B

Gross Profits

$                230,000.00

C = A - B

Cost of Goods Sold

$                720,000.00

  • Working #2

Working

Accounts receivables

Inventory

A

Beginning balance

$                240,000.00

$                  95,000.00

B

Ending balance

$                260,000.00

$                  75,000.00

C = A+B

      Total

$                500,000.00

$               170,000.00

D = C/2

Average balance

$                250,000.00

$                  85,000.00

  • Accounts receivables Turnover Ratio

A

Sales

$                950,000.00

B

Average Accounts receivables

$                250,000.00

C = A/B

Accounts receivables Turnover ratio

3.80 times

  • Inventory Turnover Ratio

A

Cost of Goods Sold

$                720,000.00

B

Average Inventory

$                  85,000.00

C = A/B

Inventory Turnover Ratio

8.47 times or 8.5times

ekkarill92 answered 3 years ago
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