1.

Williams Company began operations in January 2019 with two operating (selling) departments and one service (office) department. Its departmental income statements follow.

WILLIAMS COMPANY Departmental Income Statements For Year Ended December 31, 2019
	Clock			Mirror			Combined
Sales	$	170,000		$	75,000		$	245,000
Cost of goods sold		83,300			46,500			129,800
Gross profit		86,700			28,500			115,200
Direct expenses
Sales salaries		20,400			7,000			27,400
Advertising		1,280			700			1,980
Store supplies used		1,100			600			1,700
DepreciationEquipment		1,580			500			2,080
Total direct expenses		24,360			8,800			33,160
Allocated expenses
Rent expense		7,020			3,780			10,800
Utilities expense		5,200			2,800			8,000
Share of office department expenses		10,500			4,500			15,000
Total allocated expenses		22,720			11,080			33,800
Total expenses		47,080			19,880			66,960
Net income	$	39,620		$	8,620		$	48,240

Williams plans to open a third department in January 2020 that will sell paintings. Management predicts that the new department will generate $62,000 in sales with a 55% gross profit margin and will require the following direct expenses: sales salaries, $8,400; advertising, $1,000; store supplies, $700; and equipment depreciation, $400. It will fit the new department into the current rented space by taking some square footage from the other two departments. When opened, the new Painting department will fill one-fifth of the space presently used by the Clock department and one-fourth used by the Mirror department. Management does not predict any increase in utilities costs, which are allocated to the departments in proportion to occupied space (or rent expense). The company allocates office department expenses to the operating departments in proportion to their sales. It expects the Painting department to increase total office department expenses by $15,000. Since the Painting department will bring new customers into the store, management expects sales in both the Clock and Mirror departments to increase by 8%. No changes for those departments gross profit percents or their direct expenses are expected except for store supplies used, which will increase in proportion to sales. Required: Prepare departmental income statements that show the companys predicted results of operations for calendar-year 2020 for the three operating (selling) departments and their combined totals. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)

2.

	Current Year			Prior Year
Accounts payable, end of year	$	7,983		$	11,928
Accounts receivable, net, end of year		27,265			18,040
Inventory, end of year		10,284			9,695
Net sales		173,000			122,000
Cost of goods sold		85,000			118,000

(1) Use the information above to compute the number of days in the cash conversion cycle for each year. (2) Did the company manage cash more effectively in the current year?

WILLIAMS COMPANY Forecasted Departmental Income Statements For Year Ended December 31, 2020 Clock Mirror Paintings Combined 0 0 0 0 Direct expenses Total direct expenses 0 0 0 0 Allocated expenses Total allocated expenses 0 0 0 0 Total expenses 0 0 0 0 $ 0 $ 0 $ 0 $ 0 Use the information above to compute the number of days in the cash conversion cycle for each year. (Use 365 days in a year. Round calculations to the nearest whole day.) Current year days Prior year days Cash conversion cycle