On January 1, 2021, the general ledger of Tripley Company Included the following account balances: Accounts Debit Credit Cash $142,000 Accounts receivable 52,000 Allowance for uncollectible accounts $ 18,200 Inventory 31,200 Building 131,200 Accumulated depreciation 22,000 Land 224,000 Accounts payable 80,000 Notes payable (8%, due in 3 years) 108,000 Common stock 112,000 Retained earnings 240,200 Totals $580,400 $580,400 The $31,200 beginning balance of Inventory consists of 312 units, each costing $100. During January 2021, the company had the following transactions: January 2 Lent $32,000 to an employee by accepting a 6% note due in six months. 5 Purchased 4,100 units of inventory on account for $451,000 ($110 each) with terms 1/10, n/30. 8 Returned 100 defective units of inventory purchased on January 5. 15 Sold 3,900 units of inventory on account for $553,800 ($142 each) with terms 2/10, n/30. 17 Customers returned 200 units sold on January 15. These units were initially purchased by the company on January 5. The units are placed in inventory to be sold in the future. 20 Received cash from customers on accounts receivable. This amount includes $37,200 from 2020 plus amount receivable on sale of 3,300 units sold on January 15. 21 Wrote off remaining accounts receivable from 2020. 24 Paid on accounts payable. The amount includes the amount owed at the beginning of the period plus the amount owed from purchase of 3,700 units on January 5. 28 Paid cash for salaries during January, $40,000. 29 Paid cash for utilities during January, $22,000. 30 Paid dividends, $4,200. Month-end adjusting entries: a. Of the remaining accounts receivable, the company estimates that 10% will not be collected. b. Accrued Interest revenue on notes receivable for January c. Accrued Interest expense on notes payable for January. d. Accrued Income taxes at the end of January for $6,200. e. Depreciation on the building, $3,200. Analyze how well 3D Family Fireworks manages its receivables (a) Calculate the inventory turnover ratio for the month of January. If the industry average of the inventory turnover ratio for the month of January is 4.5 times, is the company selling its inventory more or less quickly than other companies in the same industry? The inventory turnover ratio is: times The company is managing its inventory more efficiently. (true or false) (6) Calculate the gross profit ratio for the month of January. If the industry average gross profit ratio is 39%, is the company more or less profitable per dollar of sales than other companies in the same industry? The gross profit ratio is: % The company is more profitable than other companies. (C) Used together, what might the inventory turnover ratio and gross profit ratio suggest about the company's business strategy? Is the company's strategy to sell a higher volume of less expensive items or does the company appear to be selling a lower volume of more expensive items? The company's business strategy appears to be selling
