Valley's managers have made the following additional assumptions and estimates Estimated sales for July and August are $345,000 and $315,000 respectively Each month's sales are 20 cash sales and 80 credit sales Each month's credit sales are collected 30 in the month of the sale and 70 in the month following the sale All of the accounts receivable at June 30 will be collected in July Each month's ending inventory must equal 20 of the cost of the next month's sales The Cost of Goods Sold is 60 of sales The company pays for 40 of its merchandise purchases in the month of the purchase and the remaining 60 in the month following the purchase All of the accounts payable at June 30 will be paid in July Monthly selling and administrative expenses are always $75,000 Each month $10,000 of this total amount is depreciation expense and the remaining $65,000 relates to expenses that are paid in the month they are incurred The company does not plan to buy or sell any plant and equipment during July It will not borrow any money, pay any dividends, issue any common stock or repurchase any of its own common stock during July Required I need help to calculate the estimated operating cycle for the month of July Use 30 days in the numerator to calculate the average collection period Calculate estimated Operating CycleforJuly use 30 days in numerator to calculate the average collection period and average sales period (round to 3 decimal places)

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Posted on Jun 23, 2024

Valley's managers have made the following additional assumptions and estimates: Estimated sales for July and August are $345,000 and $315,000 respectively Each month's sales are

Valley's managers have made the following additional assumptions and estimates:

Estimated sales for July and August are $345,000 and $315,000 respectively
Each month's sales are 20% cash sales and 80% credit sales. Each month's credit sales are collected 30% in the month of the sale and 70% in the month following the sale. All of the accounts receivable at June 30 will be collected in July
Each month's ending inventory must equal 20% of the cost of the next month's sales. The Cost of Goods Sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July
Monthly selling and administrative expenses are always $75,000. Each month $10,000 of this total amount is depreciation expense and the remaining $65,000 relates to expenses that are paid in the month they are incurred
The company does not plan to buy or sell any plant and equipment during July. It will not borrow any money, pay any dividends, issue any common stock or repurchase any of its own common stock during July

Required:

I need help to calculate the estimated operating cycle for the month of July. Use 30 days in the numerator to calculate the average collection period

Calculate estimated Operating CycleforJuly- use 30 days in numerator to calculate the average collection period and average sales period (round to 3 decimal places)