HW 1C

Question 4

American Bacon Inc. financial statements are presented in the table below.

Based on the information in the table, and using a 365-day year, calculate the average collection period (also called Days of Sales in Receivables or Number of Days of Credit).

Round the answers to two decimal places

Balance Sheet December 31, 2010

Cash and marketable securities $102,000 Accounts payable$287,000

Accounts receivable $299,000 Notes payable $61,200

Inventories $628,000 Accrued expenses $51,900

Prepaid expenses $10,300 Total current liabilities $400,100

Total current assets $1,039,300 Long-term debt $415,000

Gross fixed assets $1,502,000 Par value and paid-in-capital $376,000

Less: accumulated depreciation $312,000 Retained Earnings $1,038,200

Net fixed assets$1,190,000 Common Equity $1,414,200

Total assets $2,229,300 Total liabilities and owner's equity $2,229,300

Income statement, Year of 2010

Net sales (all credit) $6,387,700.00

Less: Cost of goods sold $4,726,898.00

Selling and administrative expenses $345,000.00

Depreciation expense $148,000.00

EBIT $1,167,802.00

Interest expense $50,600.00

Earnings before taxes $1,117,202.00

Income taxes $446,880.80

Net income$670,321.20

Your Answer: