Question

In: Accounting

15. Bates Corporation has issued common stock only. The company has been successful and has a...

15. Bates Corporation has issued common stock only. The company has been successful and has a gross profit rate of 20%. The information shown below was taken from the company's financial statements.

                  Beginning inventory                                              $   482,000

                  Purchases                                                               4,036,000

                  Ending inventory                                                             ?

                  Average accounts receivable                                    800,000

                  Average common stockholders' equity                  3,500,000

                  Sales (all on credit)                                                 5,000,000

                  Net income                                                                385,000

Instructions

Compute the following:

         Accounts receivable turnover and days sales in receivables.

(Check Figures: Accounts Receivable Turnover = 6.25 times, days sales in receivables = 58.4 days)

Solutions

Expert Solution

Account receivable turnover = Credit sales/average receivable

                                                   = 5000000/800000

                                                      = 6.25

days sales in receivables = A/R/credit sales * 365

                                                 = (800000/5000000)* 365

                                                      = 58.4 Days

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Hope this answer your query.

Feel free to comment if you need further assistance. J

ekkarill92 answered 11 months ago
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