Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Chippewa Corporation reported the following items at December 31, 2018, and 2017 (Click the icon to view the comparative financial information.) Read the requirements. Requirement
Chippewa Corporation reported the following items at December 31, 2018, and 2017 (Click the icon to view the comparative financial information.) Read the requirements. Requirement 1. Compute the company's (a) quick (acid-test) ratio and (b) days' sales outstanding for 2018. Evaluate each ratio value as strong or weak. All sales are on account with terms of net 30 days (a) Enter the formula and calculate the quick (acid-test) ratio for 2018. (Abbreviation used: Cash Cash and cash equivalents. Round your final answer to two decimal places.) Cash + Short-term investments + Net current receivables Total current liabilities Quick (acid-test) ratio 98,000 124,000 0.79 Chippewa's quick (acid-test) ratio is considered fairly weak. (b) Select the formula and calculate Chippewa's days' sales outstanding for 2018. Round interim calculations to two decimal places, XX.XX. Round the days' sales outstanding up to the next whole day.) - Days' sales outstanding Data Table Balance Sheets (Summarized) Year End Year End 2018 2017 2018 2017 Current assets Current liabilities Cash $ 14,00010,000Accounts payable $20,000 21,500 15,000 Other current liabilities Marketable securities 26,000 104,000 106,000 Accounts receivable, net 58,00072,000 Long-term liabilities 20,000 21,000 Inventory 192,000 188,000 Other current assets 6,000 6,000 Stockholders' equity 152,000 152,500 Long-term assets 10,000 $ 296,000 $ 301,000 296,000 $ 301,000 Total liabilities and equity Total assets Income Statement (partial) 2018 $ 910,000 Sales revenue Print Done - Days' sales outstanding 365 days Accounts payable Accounts receivable turnover Average net accounts receivable Cash Cost of goods sold Inventories Balance Sheets (Summarized) Long-term assets Long-term liabilities Net sales revenue Year End Year Other current assets 2018 2018 2017 Other current liabilities Current liabilities: Short-term investments $14,000 $ 10,000 $20,000 Accounts payable Total current assets 104,000 26,000 15,000 Other current liabilities lotal current liabilities (b) Select the formula and calculate Chippewa's days' sales outstanding for 2018. (Round interim calculations to two decimal places, X Days' sales outstanding 365 days Accounts payable Data Table Accounts receivable turnover Average net accounts receivable Cash Cost of goods sold Inventories Long-term assets Long-term liabilities Net sales revenue Year End Other current assets 2017 2018 Other current liabilities Current assets ilities Short-term investments Cash $ 20,000 $ 21,500 payable Total current assets 04,000 106,000 rent liabilities Marketable securities Total current liabilities 20.000 58.000 Accounts receivable, net 72.000 Long-term liabilities 21.000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started