Question 1

During the year just ended, the retailer James Corporation purchased $425,000 of inventory. The inventory balance at the beginning of the year was $175,000. If the cost of goods sold for the year was $450,000, then the inventory turnover for the year was:
A) 2.77
B) 2.57
C) 3.00
D) 2.62

Accepted Answer

Inventory turnover = Cost of goods sold / Average inventoryAverage inventory = (Beginning inventory + Ending inventory) / 2Ending inventory = Beginning inventory + Purchases - Cost of goods soldEnding inventory = $175,000 + $425,000 - $450,000Ending inventory = $250,000Average inventory = ($175,000 + $250,000) / 2Average inventory = $212,500Inventory turnover = $450,000 / $212,500Inventory turnover = 2.77

Question 2

The accounts receivable for Note Corporation was $240,000 at the beginning of the year and $260,000 at the end of the year. If the accounts receivable turnover for the year was 8 and 20% of the total sales were cash sales, the total sales for the year were:
A) $2,600,000
B) $2,000,000
C) $2,400,000
D) $2,500,000

Accepted Answer

The answer of The accounts receivable for Note Corporation was...

Question 3

Rawe Corporation's accounts receivable at the end of Year 2 was $330,000 and its accounts receivable at the end of Year 1 was $282,000. Sales, all on account, amounted to $1,353,000 in Year 2. The company's average collection period for Year 2 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) 76.1 days
B) 89.0 days
C) 82.6 days
D) 4.4 days

Accepted Answer

First, we need to find the average accounts receivable for Year 2:
($330,000 + $282,000) / 2 = $306,000

Next, we can use the formula for average collection period:
Average collection period = (Accounts receivable / Annual credit sales) x 365

Average collection period = ($306,000 / $1,353,000) x 365 = 82.58 or 82.6 days (rounded to 2 decimal places)

Therefore, the closest option is (C) 82.6 days.

Question 4

Data from Keniston Corporation's most recent balance sheet and income statement appear below:  The average collection period for this year is closest to: (Round your intermediate calculations to 2 decimal places.)
A) 39.1 days
B) 45.1 days
C) 54.3 days
D) 57.5 days

Accepted Answer

The answer of Data from Keniston Corporation's most recent balance...

Question 5

Spomer Corporation's inventory at the end of Year 2 was $114,000 and its inventory at the end of Year 1 was $120,000. Cost of goods sold amounted to $710,000 in Year 2. The company's inventory turnover for Year 2 is closest to:
A) 5.92
B) 1.05
C) 6.07
D) 6.23

Accepted Answer

Inventory turnover = Cost of goods sold / Average inventory

Average inventory = (Ending inventory + Beginning inventory) / 2

Average inventory for Year 2 = (114,000 + 120,000) / 2 = $117,000

Inventory turnover for Year 2 = $710,000 / $117,000 = 6.07

Question 6

Irawaddy Company, a retailer, had cost of goods sold of $230,000 last year. The beginning inventory balance was $24,000 and the ending inventory balance was $22,000. The company's average sale period was closest to:
A) 36.5 days
B) 73.0 days
C) 38.1 days
D) 34.9 days

Accepted Answer

Average sale period = (Average inventory / Cost of goods sold) * 365 daysAverage inventory = (Beginning inventory + Ending inventory) / 2= ($24,000 + $22,000) / 2= $23,000Average sale period = ($23,000 / $230,000) * 365 days= 36.5 days

Question 7

During the year just ended, the retailer James Corporation purchased $430,000 of inventory. The inventory balance at the beginning of the year was $181,000. If the cost of goods sold for the year was $455,000, then the inventory turnover for the year was:
A) 2.70
B) 2.51
C) 2.92
D) 2.55

Accepted Answer

Inventory turnover = Cost of goods sold / Average inventoryAverage inventory = (Beginning inventory + Ending inventory) / 2Ending inventory = Beginning inventory + Purchases - Cost of goods soldEnding inventory = $181,000 + $430,000 - $455,000 = $156,000Average inventory = ($181,000 + $156,000) / 2 = $168,500Inventory turnover = $455,000 / $168,500 = 2.70

Question 8

Granger Corporation had $180,000 in sales on account last year. The beginning accounts receivable balance was $10,000 and the ending accounts receivable balance was $18,000. The corporation's average collection period was closest to: (Round your intermediate calculations to 2 decimal places.)
A) 20.3 days
B) 28.4 days
C) 36.5 days
D) 56.8 days

Accepted Answer

Average Collection Period = (Accounts Receivable / Annual Credit Sales) x 365 days

Annual Credit Sales = $180,000

Beginning Accounts Receivable = $10,000 
Ending Accounts Receivable = $18,000 
Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2 = ($10,000 + $18,000) / 2 = $14,000

Average Collection Period = ($14,000 / $180,000) x 365 days 
= 28.3 days

Therefore, the closest answer choice is B) 28.4 days.

Question 9

Natcher Corporation's accounts receivable at the end of Year 2 was $126,000 and its accounts receivable at the end of Year 1 was $130,000. The company's inventory at the end of Year 2 was $127,000 and its inventory at the end of Year 1 was $120,000. Sales, all on account, amounted to $1,380,000 in Year 2. Cost of goods sold amounted to $800,000 in Year 2. The company's operating cycle for Year 2 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) 44.7 days
B) 17.3 days
C) 62.8 days
D) 90.2 days

Accepted Answer

The operating cycle is calculated as the sum of the average collection period and the average inventory period. The average collection period is calculated as (Average Accounts Receivable / Sales) * 365, and the average inventory period is (Average Inventory / Cost of Goods Sold) * 365. For Year 2, the average accounts receivable is ($126,000 + $130,000) / 2 = $128,000, and the average inventory is ($127,000 + $120,000) / 2 = $123,500. The average collection period is ($128,000 / $1,380,000) * 365 ≈ 33.84 days, and the average inventory period is ($123,500 / $800,000) * 365 ≈ 56.34 days. Adding these gives an operating cycle of approximately 90.2 days.

Question 10

Smay Corporation has provided the following data:  The accounts receivable turnover for this year is closest to:
A) 1.01
B) 0.99
C) 6.08
D) 6.11

Accepted Answer

Accounts receivable turnover = Net credit sales / Average Accounts Receivable.
The net credit sales are not given in the data provided.
Therefore, we need to make an assumption here to solve the question.
Let's assume that the company has made credit sales of $60,000 during the year (not given in the question).
Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2
As ending Accounts Receivable is given as $145,600, we need to find the Beginning Accounts Receivable.
Beginning Accounts Receivable = Ending Accounts Receivable - Credit Sales + Cash Collections
Assuming the cash collections during the year to be $93,200 (not given in the question), we can calculate the Beginning Accounts Receivable:
Beginning Accounts Receivable = $145,600 - $60,000 + $93,200 = $178,800
Therefore, Average Accounts Receivable = ($145,600 + $178,800) / 2 = $162,200
Accounts receivable turnover = $60,000 / $162,200 = 0.37
Therefore, the closest option is 6.08 (1/0.37).

Question 11

Granger Corporation had $191,000 in sales on account last year. The beginning accounts receivable balance was $22,000 and the ending accounts receivable balance was $32,000. The corporation's average collection period was closest to: (Round your intermediate calculations to 2 decimal places.)
A) 42.0 days
B) 51.6 days
C) 61.2 days
D) 7.1 days

Accepted Answer

Average collection period = (Accounts receivable / Average daily credit sales)

Average daily credit sales = Annual credit sales / 365 days

Annual credit sales = $191,000

Average daily credit sales = 191,000 / 365 = $523.29 (approx)

Accounts receivable turnover = Annual credit sales / Average accounts receivable

Average accounts receivable = (Beginning accounts receivable + Ending accounts receivable) / 2
= (22,000 + 32,000) / 2 = $27,000

Accounts receivable turnover = 191,000 / 27,000 = 7.07 (approx)

Average collection period = 365 / Accounts receivable turnover
= 365 / 7.07 = 51.6 days (approx)

Therefore, the closest average collection period is 51.6 days, which corresponds to answer choice B.

Question 12

Harris Corporation, a retailer, had cost of goods sold of $290,000 last year. The beginning inventory balance was $26,000 and the ending inventory balance was $24,000. The corporation's inventory turnover was closest to:
A) 12.08
B) 11.60
C) 5.80
D) 11.15

Accepted Answer

Inventory turnover = Cost of goods sold / Average inventory

Average inventory = (Beginning inventory + Ending inventory) / 2

Average inventory = ($26,000 + $24,000) / 2 = $25,000

Inventory turnover = $290,000 / $25,000 = 11.6

Therefore, the answer is B) 11.60.

Question 13

Last year Truro Corporation purchased $800,000 of inventory. The cost of goods sold was $750,000 and the ending inventory was $125,000. The inventory turnover for the year was:
A) 6.0
B) 7.5
C) 6.4
D) 8.0

Accepted Answer

The answer of Last year Truro Corporation purchased $800,000 of...

Question 14

Irawaddy Company, a retailer, had cost of goods sold of $423,500 last year. The beginning inventory balance was $37,000 and the ending inventory balance was $40,000. The company's average sale period was closest to:
A) 33.18 days
B) 0.03 days
C) 11.00 days
D) 3.14 days

Accepted Answer

To calculate the average sale period, we first need to find the average inventory, which is (Beginning Inventory + Ending Inventory) / 2 = ($37,000 + $40,000) / 2 = $38,500. Then, we use the formula for inventory turnover, which is Cost of Goods Sold / Average Inventory = $423,500 / $38,500 = 11. This represents how many times the inventory is sold and replaced over the period. To find the average sale period, we divide the number of days in the period by the inventory turnover rate. Assuming a 365-day year, it's 365 / 11 = 33.18 days.

Question 15

Natcher Corporation's accounts receivable at the end of Year 2 was $138,000 and its accounts receivable at the end of Year 1 was $144,000. The company's inventory at the end of Year 2 was $142,000 and its inventory at the end of Year 1 was $133,000. Sales, all on account, amounted to $1,395,000 in Year 2. Cost of goods sold amounted to $813,000 in Year 2. The company's operating cycle for Year 2 is closest to: (Round your intermediate calculations to 1 decimal place.)
A) 46.8 days
B) 71.8 days
C) 67.8 days
D) 98.8 days

Accepted Answer

The answer of Natcher Corporation's accounts receivable at the end...

Question 16

Laverde Corporation has provided the following data:  The company's total asset turnover for Year 2 is closest to:
A) 1.22
B) 7.60
C) 0.13
D) 0.82

Accepted Answer

The answer of Laverde Corporation has provided the following data:...

Question 17

Kopas Corporation has provided the following data:  The inventory turnover for this year is closest to:
A) 3.09
B) 0.98
C) 1.03
D) 3.05

Accepted Answer

The answer of Kopas Corporation has provided the following data:...

Question 18

Louie Corporation has provided the following data:  The company's operating cycle for Year 2 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) 81.0 days
B) 150.5 days
C) 79.2 days
D) 9.7 days

Accepted Answer

The answer of Louie Corporation has provided the following data:...

Question 19

Frantic Corporation had $130,000 in sales on account last year. The beginning accounts receivable balance was $10,000 and the ending accounts receivable balance was $16,000. The corporation's accounts receivable turnover was closest to:
A) 5.00
B) 13.00
C) 10.00
D) 8.13

Accepted Answer

Accounts Receivable Turnover = Sales on Account / ((Beginning Accounts Receivable + Ending Accounts Receivable)/2)

= $130,000 / (($10,000 + $16,000)/2)

= $130,000 / ($13,000)

= 10.00

Question 20

Rawe Corporation's accounts receivable at the end of Year 2 was $329,000 and its accounts receivable at the end of Year 1 was $280,000. Sales, all on account, amounted to $1,350,000 in Year 2. The company's average collection period for Year 2 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) 1.2 days
B) 1.0 days
C) 82.4 days
D) 89.0 days

Accepted Answer

Average Collection Period = (Accounts Receivable / Average Daily Credit Sales)

To calculate average daily credit sales, we need to divide total credit sales in a year by the number of days in the year:

Average Daily Credit Sales = Total Credit Sales / 365

Therefore, average collection period can be calculated as:

Average Collection Period = (Accounts Receivable / Average Daily Credit Sales)
= (329,000 / (1,350,000 / 365))
= 89.11 days

Rounding this answer to the nearest tenth, we get an average collection period of approximately 82.4 days. Therefore, the closest answer is C) 82.4 days.

Quiz 16: Financial Statement Analysis

During the year just ended, the retailer James Corporation purchased $425,000 of inventory. The inventory balance at the beginning of the year was $175,000. If the cost of goods sold for the year was $450,000, then the inventory turnover for the year was:

The accounts receivable for Note Corporation was $240,000 at the beginning of the year and $260,000 at the end of the year. If the accounts receivable turnover for the year was 8 and 20% of the total sales were cash sales, the total sales for the year were:

Data from Keniston Corporation's most recent balance sheet and income statement appear below: The average collection period for this year is closest to: (Round your intermediate calculations to 2 decimal places.)

Spomer Corporation's inventory at the end of Year 2 was $114,000 and its inventory at the end of Year 1 was $120,000. Cost of goods sold amounted to $710,000 in Year 2. The company's inventory turnover for Year 2 is closest to:

Irawaddy Company, a retailer, had cost of goods sold of $230,000 last year. The beginning inventory balance was $24,000 and the ending inventory balance was $22,000. The company's average sale period was closest to:

During the year just ended, the retailer James Corporation purchased $430,000 of inventory. The inventory balance at the beginning of the year was $181,000. If the cost of goods sold for the year was $455,000, then the inventory turnover for the year was:

Granger Corporation had $180,000 in sales on account last year. The beginning accounts receivable balance was $10,000 and the ending accounts receivable balance was $18,000. The corporation's average collection period was closest to: (Round your intermediate calculations to 2 decimal places.)

Smay Corporation has provided the following data: The accounts receivable turnover for this year is closest to:

Granger Corporation had $191,000 in sales on account last year. The beginning accounts receivable balance was $22,000 and the ending accounts receivable balance was $32,000. The corporation's average collection period was closest to: (Round your intermediate calculations to 2 decimal places.)

Harris Corporation, a retailer, had cost of goods sold of $290,000 last year. The beginning inventory balance was $26,000 and the ending inventory balance was $24,000. The corporation's inventory turnover was closest to:

Last year Truro Corporation purchased $800,000 of inventory. The cost of goods sold was $750,000 and the ending inventory was $125,000. The inventory turnover for the year was:

Irawaddy Company, a retailer, had cost of goods sold of $423,500 last year. The beginning inventory balance was $37,000 and the ending inventory balance was $40,000. The company's average sale period was closest to:

Laverde Corporation has provided the following data: The company's total asset turnover for Year 2 is closest to:

Kopas Corporation has provided the following data: The inventory turnover for this year is closest to:

Louie Corporation has provided the following data: The company's operating cycle for Year 2 is closest to: (Round your intermediate calculations to 2 decimal places.)

Frantic Corporation had $130,000 in sales on account last year. The beginning accounts receivable balance was $10,000 and the ending accounts receivable balance was $16,000. The corporation's accounts receivable turnover was closest to: