The following information applies to Markham Company:
Additional information: Net credit sales equal $220,000 and beginning accounts receivable were $11,000.Required:Compute Markham's:(a) Quick ratio(b) Current ratio(c) Working capital(d) Accounts receivable turnover(e) Average days to collect receivablesRound your answers to two decimal places.
What will be an ideal response?
(a) 1.27
(b) 2.33
(c) $20,000
(d) 18.33 times
(e) 365 ÷ 18.33 = 19.91
(a) Quick ratio = ($6,000 + $13,000) ÷ ($5,000 + $10,000) = 1.27
(b) Current ratio = ($6,000 + 13,000 + $16,000) ÷ ($5,000 + $10,000) = 2.33
(c) Working Capital = ($6,000 + $13,000 + $16,000) ? ($5,000 + $10,000) = $20,000
(d) Accounts Receivable Turnover = $220,000 ÷ (($11,000 + $13,000) ÷ 2)) = 18.33 times
(e) Average days to collect receivables = 365 ÷ 18.33 = 19.91
You might also like to view...
The following information is reported in the operating activities section of Gateway's statement of cash flows for 2014: Net income $1,200,000 Increase in inventories 600,000 Decrease in accounts payable 400,000 Which one of the following conclusions can be assumed from the information provided?
a. Gateway used the direct method to determine cash flows from operating activities. b. Gateway purchased more merchandise than it sold in 2014. c. Cash payments for merchandise purchases were less than the amount of merchandise purchased on credit during 2014. d. Cash payments for merchandise exceeded cost of goods sold by $200,000.
A transfer price is the price charged for a component by the selling division to the buying division of the same company
Indicate whether the statement is true or false
Which of the following is a difference between a sale or return contract and a sale on approval contract?
A) For sale or return, the risk of loss is borne by the buyer; while in a sale on approval, it is borne by the seller. B) For sale or return, the goods are sold to the buyer; while in a sale on approval, the buyer is allowed a time period to test the goods. C) For sale or return, failure to notify rejection is not acceptance; while in a sale on approval, failure to notify rejection is acceptance. D) For sale or return, goods sold can be returned; while in a sale on approval, goods sold can never be returned.
LinkedIn is the least popular networking website for business professionals
Indicate whether the statement is true or false