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Question 2 a) Canadian Bacon Inc. financial statements are presented in the table below. Based on the information in the table, and using cost of

Question 2

a) Canadian Bacon Inc. financial statements are presented in the table below.

Based on the information in the table, and using cost of goods sold and a 365-day year, calculate Days of Sales in Inventory (using cost of goods sold).

Round the answers to two decimal places

Balance Sheet December 31, 2011

Cash and marketable securities

$143,000

Accounts payable

$278,000

Accounts receivable

$354,000

Notes payable

$87,000

Inventories

$672,000

Accrued expenses

$65,000

Prepaid expenses

$12,500

Total current liabilities

$430,000

Total current assets

$1,181,500

Long-term debt

$284,000

Gross fixed assets

$1,675,000

Par value and paid-in-capital

$228,000

Less: accumulated depreciation

$500,000

Retained Earnings

$1,414,500

Net fixed assets

$1,175,000

Common Equity

1,642,500

Total assets

$2,356,500

Total liabilities and owners equity

$2,356,500

Income Statement Year of 2011

Net sales (all credit)

$3,136,600.00

Less: Cost of goods sold

$2,195,620.00

Selling and administrative expenses

$345,000.00

Depreciation expense

$146,000.00

EBIT

$449,980.00

Interest expense

$45,300.00

Earnings before taxes

$404,680.00

Income taxes

$161,872.00

Net income

$242,808.00

Answer:

(111.71)

Average Credit Sales per Day

Question 3

a) Canadian Bacon Inc. financial statements are presented in the table below.

Based on the information in the table, and using a 365-day year, calculate Average Credit Sales per Day.

Round the answers to two decimal places

Balance Sheet December 31, 2012

Cash and marketable securities

$198,000

Accounts payable

$288,000

Accounts receivable

$469,000

Notes payable

$65,000

Inventories

$577,000

Accrued expenses

$84,000

Prepaid expenses

$15,700

Total current liabilities

$437,000

Total current assets

$1,259,700

Long-term debt

$237,000

Gross fixed assets

$1,954,000

Par value and paid-in-capital

$199,000

Less: accumulated depreciation

$476,000

Retained Earnings

$1,864,700

Net fixed assets

$1,478,000

Common Equity

2,063,700

Total assets

$2,737,700

Total liabilities and owners equity

$2,737,700

Income Statement, Year of 2012

Net sales (all credit)

$7,546,600.00

Less: Cost of goods sold

$6,112,746.00

Selling and administrative expenses

$349,000.00

Depreciation expense

$145,000.00

EBIT

$939,854.00

Interest expense

$49,500.00

Earnings before taxes

$890,354.00

Income taxes

$356,141.60

Net income

$534,212.40

Answer:

(20,675.60)

Days of Sales in Receivables

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