Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The following data available for UFO Deli Ltd. Account Beginning balance Ending Balance Use/source of cash Accounts payable 27,400 25,500 Inventory 62,600 67,700 Long term
The following data available for UFO Deli Ltd.
Account | Beginning balance | Ending Balance | Use/source of cash |
Accounts payable | 27,400 | 25,500 |
|
Inventory | 62,600 | 67,700 |
|
Long term debts | 125,500 | 95,600 |
|
Common stock | 220,400 | 245,500 |
|
Other information:
- The company just placed an order for 700 kg of chicken drumsticks at a unit price of $3/kg. The supplier offers credit terms of 2/15, net 45.
- Beginning balance of accounts receivable is $27,500. Ending balance of accounts receivable of $26,800
- Total revenue (all sales are on credit) is $287,500
- Total cost of goods sold is $195,000
Required:
- What is the discount being offered by the supplier to UFO Deli Ltd. ? How quickly must the company pay to get the discount? If the company takes the discount, how much should they pay? (1 mark)
- Calculate and identify the source of cash or the use of cash for each account by filling into the column next to the ending balance (2 marks)
- Calculate the operating cycle and interpret the outcome (4 marks)
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