OPERATING CYCLE AND CURRENT RECEIVABLES. For each of the businesses described below, indicate the length of the
Question:
OPERATING CYCLE AND CURRENT RECEIVABLES. For each of the businesses described below, indicate the length of the operating cycle and the duration of the longest receivable that can be classified as current on the business’ balance sheet.
1. Dither and Sly are attorneys-at-law who specialize in federal income tax law. They complete their typical case in 6 months or less and collect from the typical client within 1 additional month.
2. Johnston’s Market specializes in fresh meat and fish. All merchandise must be sold within 1 week of purchase, and all business is cash and carry.
3. Mortondo’s is a women’s clothing store specializing in high-style merchandise. Merchandise spends an average of 7 months on the rack following purchase. Most sales are on credit, and the typical customer pays within 1 month of sale.
4. Trees, Inc., grows Christmas trees and sells them to various Christmas tree lots for cash on delivery. It takes 6 years to grow a tree.L-1
Step by Step Answer: