Assume were at the end of this year planning next years financial statements. Calculate the following using

Question:

Assume we’re at the end of “this year” planning “next year’s” financial statements.

Calculate the following using indirect planning assumptions as indicated.

a. Sales are forecast to be $58,400,000. Management wants to plan for a 45-day ACP next year. What ending receivables balance should be planned for next year?

b. What ending inventory should be planned if revenue is expected to be $457,000 and the cost ratio is 53% (cost of goods sold as a percentage of revenue) and management wants to forecast an inventory turnover of 5*

c. Normal credit terms from suppliers request payment within 30 days. In an effort to conserve cash, management has decided to pay in 50 days. Nearly all payables come from purchases of inventory. Materials make up 60% of the Cost of Goods Sold. Next year’s revenue is forecast to be $378 million. The firm’s cost ratio is expected to be 56%. What figure should be included in next year’s ending balance sheet for Accounts Payable?

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...