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frosja888 [35]
3 years ago
9

inventory Turnover and Days' Sales in Inventory The following financial statement data for years ending December 31 for Holland

Company are shown below. 20Y4 20Y3 Cost of merchandise sold $1,489,200 $945,934 Inventories: Beginning of year 359,160 251,120 End of year 516,840 359,160 a. Determine the inventory turnover for 20Y4 and 20Y3. Round to one decimal place. Inventory Turnover 20Y4 20Y3 b. Determine the days' sales in inventory for 20Y4 and 20Y3. Assume 365 days a year. Round interim calculations and final answers to one decimal place. Days' Sales in Inventory 20Y4 days 20Y3 days
Business
1 answer:
Varvara68 [4.7K]3 years ago
4 0

Answer:

                                            Year 2014           Year 2013

a) Inventory Turnover ratio 3.4 times  and   3.1 times

b) Number of days' sales in inventory 107.3 days and  117.7 days

Explanation:

As per the data given in the question,

As we know that

Inventory turnover ratio = Cost of goods sold ÷ Average inventory

where,

Average inventory

= (Beginning inventory + ending inventory) ÷ 2

For Year 20Y4 :

Average inventory = ($359,160 + $516,840 ) ÷2

= $438,000

And, the cost of goods sold is $1,489,200

So,

Inventory Turnover ratio

= $1,489,200 ÷ $438,000

= 3.4 times

For Year 20Y3 :

Average inventory = ($251,120 + $359,160) ÷ 2

= $305,140

And, the cost of goods sold is $945,934

So,

Inventory Turnover ratio

= $945,934 ÷ $305,140

= 3.1 times

Now

Number of days' sales in inventory = Number of days in a year ÷ Inventory Turnover ratio

For 20Y4

= 365 days ÷ 3.4

= 107.3 days

For 20Y3

= 365 days ÷ 3.1

= 117.7 days

Basically we applied the above formulas

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Viktor [21]

Answer and Explanation:

The computation is shown below;

a.

Inventory Unsold in Hand (90-45) 45

Unit cost Unsold (45 × 480) $21,600.00

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Value of Inventory (21600 + 425) $22,025.00

b.  

Sale value (45 × 780) $35,100.00

Less: Cost  

Unit cost Sold (21600+425) -$22,025.00

Comission of Consignee (35,100 × 6%) -$2,106.00

Advertising cost -$210.00

Installation cost -$330.00

Net Profit $10,429.00

c.  

Sale value (45 × 780) $35,100.00

Less: deduction made by consignee  

Comission of Consignee (35100 × 6%) -$2,106.00

Advertising cost -$210.00

Installation cost -$330.00

Net Remittance made by consignee $32,454.00

5 0
3 years ago
Another bank is also offering favorable terms, so Rahul decides to take a loan of $14,000 from this bank. He signs the loan cont
nikklg [1K]

Answer: $14,426.43

Explanation:

At the end of 4 months and assuming a  12 months and 365 days in a year, the formula to be used to calculate how much Rahul owes is;

We use the formula:

Amount owed = Present Value ( 1 + rate/365 ) ^ 365 * time period

Amount owed = 14,000 * ( 1 + 0.09/365 ) ^ (365 *4/12 )

Amount owed  = $14,426.43

3 0
3 years ago
Which of the following group is not normally interested in the financial information about a business?
Blababa [14]

Answer:

The correct option is a. Debtors

Explanation:

In this question, we categorized the internal and external users or a group who are interested in the financial information about a business.

Internal users are those users who work in an entity which includes employees, owners, managers

Where, external users are those users who are outside the entity that includes suppliers, lenders, creditors, government agencies, bank,general public,etc.

These users are interested to interpret the financial leverage of the company.

By going through the meaning we get to know that the debtors are not normally interested in the financial information about a business.

Hence, the correct option is a. Debtors.

8 0
2 years ago
Red Sox Corporation wants to purchase a new machine for $350,000. Management predicts that the machine can produce sales of $205
Cloud [144]

Answer:

The payback period for the new machine is 3.5 years.

Explanation:

Pay Back Period: The pay back period shows that period in which the borrower has to repay the borrowed amount taken by the financial institution.

In Mathematically,

Payback Period = Initial Investment ÷ Annual cash inflows

where initials investment is $350,000 given

And, the annual cash flows is to computed which is shown below:

= Sales - all expenses - Depreciation - tax rate + depreciation

where,

Sales - all expenses - Depreciation = Net income before tax

Net income before tax - tax rate = Net income after tax

Net income after tax +  depreciation = Annual cash inflows

And Depreciation = (Purchase cost - Residual value) ÷ Useful life

So,

Depreciation = $350,000 ÷ 5 = $ 70,000

$205,000 - $85,000 - $70,000  = Net income before tax = $50,000

$40,000 - 35% = Net income after tax = $32,500

$32500 + $ 70,000 = Annual cash inflows = $102,500

Since the depreciation is non cash expense, so it is added back.

Now Payback period = Initial Investment ÷ Annual cash inflows

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                                   = 3.5 years.

Thus, the payback period for the new machine is 3.5 years.

8 0
3 years ago
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Aliun [14]

Answer:

$2,255

Explanation:

The computation of the cost of good sold using the LIFO method is shown below:

Data given in the question

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And, 11 units are sold on October 4

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= Number of units sold × price of each units

= 11 units × $205

= $2,255

6 0
3 years ago
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