Question

In: Accounting

Excerpts from Candle Corporation's most recent balance sheet (in thousands of dollars) appear below:         Year...

Excerpts from Candle Corporation's most recent balance sheet (in thousands of dollars) appear below:

       

Year 2   Year 1
  Current assets:
     Cash $ 250 $ 110
     Accounts receivable 250 260
     Inventory 130 130
     Prepaid expenses 59 69
  Total current assets $ 689 $ 569
  Current liabilities:
     Accounts payable $ 180 $ 180
     Accrued liabilities 90 89
     Notes payable, short term 69 59
  Total current liabilities $ 339 $ 328

   

Sales on account during the year totaled $1,570 thousand. Cost of goods sold was $955 thousand.


f. Compute the following inventory turnover for Year 2.(Round your answer to 2 decimal places.)

  

      

g.

Compute the following average sale period for Year 2. (Use 365 days in a year. Round your intermediate calculations to 2 decimals places and your final answer to 2 decimal place.)

Solutions

Expert Solution

Answer:
(f)
Average inventory = Opening inventory + Closing Inventory / 2
                                        =   $130 + $130 / 2
                                        =   $130
Inventory turnover for year 2
             = Cost of Goods sold / Average inventory
             =   $955 / $130
             =   7.35
(g)
Average sale period = 365 / inventory turnover
                                           = 365 / ($955 / $130 ) (or ) 365 / 7.35
                                           = 49.69 days (or) 49.66 days

ekkarill92 answered 1 year ago
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