Balance Sheets As of December 31 Accounts receivable Allowance for doubtful accounts Net accounts receivable Inventories, lower of cost or market Year 2 Year 3 $600,000 $480,000 (40,000) (20,000) $560,000 $460,000 $500,000 $400,000 Income Statement For the Years Ended December 31 Net credit sales Net cash sales Net sales Cost of goods sold Selling, general, and administrative expenses Other expenses Total operating expenses Required a. Compute the accounts receivable turnover for Year 3. b. Compute the inventory turnover for Year 3. c. Compute the net margin for Year 2. Year 3 $2,400,000 600,000 3,000,000 1,800,000 300,000 80,000 $2,180,000 Year 2 $1,950,000 450,000 2,400,000 1,520,000 240,000 50,000 $1,810,000

Balance Sheets As of December 31 Accounts receivable Allowance for doubtful accounts Net accounts receivable Inventories, lower of cost or market Year 2 Year 3 $600,000 $480,000 (40,000) (20,000) $560,000 $460,000 $500,000 $400,000 Income Statement For the Years Ended December 31 Net credit sales Net cash sales Net sales Cost of goods sold Selling, general, and administrative expenses Other expenses Total operating expenses Required a. Compute the accounts receivable turnover for Year 3. b. Compute the inventory turnover for Year 3. c. Compute the net margin for Year 2. Year 3 $2,400,000 600,000 3,000,000 1,800,000 300,000 80,000 $2,180,000 Year 2 $1,950,000 450,000 2,400,000 1,520,000 240,000 50,000 $1,810,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Number 3
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