Question

The following information was available for the year ended December 31, 2019 Net sales Cost of goods sold Average accounts receivable for the year Accounts receivable at year-end Average inventory for the year Inventory at year-end $1,022,000 642,400 43,000 22,400 210.000 156409
Required:
a. Calculate the inventory turnover for 2019. (Round your answer to 2 decimal places.)
b. Calculate the number of days' sales in inventory for 2019. using year-end inventories (Use 365 days a year. Round your answer to 1 decimal place.)
c. Calculate the accounts receivable turnover for 2019. (Round your answer to 1 decimal place.)
d. Calculate the number of days' sales in accounts receivable for 2019. using year-end accounts receivable. (Use 365 days a year.
Round your answer to 1 decimal place.)
a. Inventory turnover
b. Number of days sales in Inventory
c. Accounts receivable turnover
d. Number of days sales in accounts receivable

Answer 1

Answer:

a. Inventory Turnover:

= Cost of goods sold / Average inventory for the year

= 642,400 / 210,000

= 3.06

b. Number of days' sales in inventory

= Ending inventory / (COGS / 365)

= 156,409 / (642,400 / 365)

= 88.9 days

c. Accounts receivable turnover

= Net sales / Average Accounts Receivable

= 1,022,000 / 43,000

= 23.77 times

d. Number of days sales in accounts receivable

= Accounts Receivable at year end / (Net sales / 365)

= 22,400 / (1,022,000 / 365)

= 8 days