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In: Finance

The balance sheet and income statement for Cruise Corporation are as follows:

The balance sheet and income statement for Cruise Corporation are as follows:                                                                     
                                                Balance Sheet as of December 31, 2020                                           
                                                                                   
ASSETS                                                                         LIABILITIES & EQUITY             
            Cash & marketable securities $2,000             Accounts payable                    $30,000
            Accounts Receivable               35,000             Taxes payable                         9,000


            Inventory                                 15,000             Short-term borrowings           12,000
            Total current assets                $52,000           Total current liabilities           $51,000
            Net P,P & E                              $448,000         Long-term debt                       $200,000
            TOTAL ASSETS                         $500,000         Total liabilities                        $251,000
                                                                                    Common stock at par             $80,000
                                                                                    Additional paid-in capital       $30,000
                                                                                    Retained earnings                   $139,000
                                                                        TOTAL LIABILITIES & EQUITY              $500,000

                                    Income Statement for the year ending December 31, 2020                                                                                                 
            Sales                            $800,000                                
            Cost of goods sold       560,000                                  
            Gross profit                 $240,000                                
            S, G & A                       100,000                                  
            Operating profit          $140,000                                
            Interest expense         11,660                                    
            Earnings b4 tax           $128,340                                
            Income tax                  39,785                                    
            Net Income                 $88,555                                  
                                                                                   
Cruiseʹs stock was selling for $7 a share at the end of 2020, and there were 95 thousand shares outstanding. Cruise paid dividends of $0.05 a share in 2020          . Approximately how many days are Cruiseʹs customers taking to pay their bills? Assume a 365-day year.

23 days

16 days

25 days                                                       
                                                                                   

20 days

Solutions

Expert Solution

Solution:-

Computation of No. of days Cruise's customers taking to pay their bills;

Number of days = (Accounts receivable / Sales) * 365 days

Given,

Accounts receivable = $35,000

Sales = $800,000

Number of days = ($35,000 / $800,000) * 365

= 0.04375 * 365

= 15.96875 or 16 approx

Therefore the number of days required for cruise's customers to pay the bill are 16 days which is option 2

jeff jeffy answered 2 years ago
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