PRINCIPLES OF ACCOUNTING - ACCT-101

ASSIGNMENT- 3

Last Date for Submission November 19, 2016

Each Question carries one mark.

Q1. What is the acid-test ratio? How does it measure a company's liquidity? Explain with Example.

Q2. The following information is available for the McCartney Corporation:

Sales	$750,000
Cost of goods sold	450,000
Gross profit	300,000
Operating income	85,000
Net income	42,000
Inventory, beginning-year	71,200
Inventory, end-of-year	48,800

Calculate the company's inventory turnover and its days' sales in inventory.

Q3. A company made the following merchandise purchases and sales during the month of July:

July 1 purchased	380	units at	$15 each
July 5 purchased	270	units at	$20 each
July 9 sold	500	units at	$55 each
July 14 purchased	300	units at	$24 each
July 20 sold	250	units at	$55 each
July 30 purchased	250	units at	$30 each

There was no beginning inventory. If the company uses the first-in, first-out perpetual inventory method what would be the cost of the ending inventory?