ARE 110 Summer 2022 Assignment 4 Question 1 The following information reflects some financial data from Knights, Inc., an agribusiness supply store in Parkersburg, WV. The information shown in for several years, namely 2017, 2018 and 2019. ITEM Net sales (in millions) (Include all stores) Number of stores Square feet of selling space (in millions) Average net sales of comparable stores (in millions) Instructions 2017 2018 2019 $30,000 $35,000 $40,000 400 450 470 20 22 24 $147.00 $144.50 $142.30 a. Calculate the percentage change in net sales from 2017 to 2018 and 2018 to 2019 (round all computations to one decimal place). Is Knights, Inc. improving over time? Explain your answer. b. Calculate the percentage change in net sales per square foot of selling space from 2017 to 2018 and 2018 to 2019 (round all computations to one decimal place). Is Knights, Inc. improving over time? Explain your answer. Question 2 Dee's Candy Company uses a perpetual inventory system. A partial chart of accounts is shown below, followed by a series of merchandising transactions. Indicate the accounts that should be debited and credited in recording each transaction. (You can ignore sales taxes.) 1 Cash 50 Sales 2 Accounts Receivable 60 Cost of Goods Sold 5 Inventory 99 Income Summary 30 Accounts Payable 40 Retained Earnings Instruction: Indicate the accounts that should be debited and credited in recording each transaction. (You can ignore sales taxes.) Transactions Example: Sold merchandise for cash A Purchased merchandise on account B C Sold merchandise on account (hint: 2 accounts at each side for this transaction) Paid the supplier of the merchandise in transaction A Debited 1: Cash Credited 50: Sales 60: Cost of good sold 5: Inventory D Collected cash from the customer in transaction B E The physical inventory at year-end disclosed a normal amount of inventory shrinkage F Made an entry to close the Revenue account G Made an entry at year-end to close the Cost of Goods Sold account Closed the Income Summary account at the H end of an unprofitable year Question 3 Assume that you were hired by Dollar Captain in 2018 to develop and implement a new credit policy. At the time of your hire, the average collection period for an outstanding receivable was in excess of 90 days (far greater than the industry average). Thus the primary purpose of the new policy was to better screen credit applicants in an attempt to improve the quality of the company's accounts receivable. Shown as follows are sales and accounts receivable data for the past four years (in thousands). Based on the given data, calculate the account receivable turnover rate and average number of days to collect account receivable (assuming days in year =360) over the years and explain if the credit policy you developed successful? Explain. Sales 2021 2020 2019 2018 $17,000 $14,580 $9,600 $9,000 Average accounts receivable Accounts receivable turnover rate Average number of days to collect accounts receivable 1,700 1,620 1,600 1,800 Explanations