Excerpts from Candle Corporation's most recent balance sheet (In thousands of dollars) appear below: Year 2 Year 1 Current assets: Cash $162 $100 Accounts receivable, net Inventory Prepaid expenses 192 192 142 132 92 92 Total current assets $588 $516 Current liabilities: Accounts payable Accrued liabilities $202 $182 32 32 Notes payable, short term 92 82 Total current liabilities $326 $296 Sales on account during the year totaled $1,210 thousand. Cost of goods sold was $810 thousand. Requlred: Compute the following for Year 2: a. Working capital. (Enter your answer In thousands of dollars, I.e., 100,000 should be entered as 100.) b. Current ratio. (Round your answer to 2 decimal places.) C. Acid-test (quick) ratio. (Round your answer to 2 decimal places.) d. Accounts recelvable turnover. (Round your answer to 2 decimal places.) e. Average collection perlod. (Use 365 days In a year. Round your Intermedlate calculations to 2 decimals places and your final answer to 1 decimal place.) f. Inventory turnover. (Round your answer to 2 decimal places.) g. Average sale perlod. (Use 365 days In a year. Round your Intermedlate calculations to 2 decimals places and your final answer to 1 decimal place.) a. Working capital b. Current ratio c. Acid-test ratio d. Accounts receivable turnover e. Average collection period 262 1.80 1.09 57.9 days f. Inventory turnover 5.91 g. Average sale period 61.7 days
Excerpts from Candle Corporation's most recent balance sheet (In thousands of dollars) appear below: Year 2 Year 1 Current assets: Cash $162 $100 Accounts receivable, net Inventory Prepaid expenses 192 192 142 132 92 92 Total current assets $588 $516 Current liabilities: Accounts payable Accrued liabilities $202 $182 32 32 Notes payable, short term 92 82 Total current liabilities $326 $296 Sales on account during the year totaled $1,210 thousand. Cost of goods sold was $810 thousand. Requlred: Compute the following for Year 2: a. Working capital. (Enter your answer In thousands of dollars, I.e., 100,000 should be entered as 100.) b. Current ratio. (Round your answer to 2 decimal places.) C. Acid-test (quick) ratio. (Round your answer to 2 decimal places.) d. Accounts recelvable turnover. (Round your answer to 2 decimal places.) e. Average collection perlod. (Use 365 days In a year. Round your Intermedlate calculations to 2 decimals places and your final answer to 1 decimal place.) f. Inventory turnover. (Round your answer to 2 decimal places.) g. Average sale perlod. (Use 365 days In a year. Round your Intermedlate calculations to 2 decimals places and your final answer to 1 decimal place.) a. Working capital b. Current ratio c. Acid-test ratio d. Accounts receivable turnover e. Average collection period 262 1.80 1.09 57.9 days f. Inventory turnover 5.91 g. Average sale period 61.7 days
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![**Excerpts from Candle Corporation's Balance Sheet**
The balance sheet for Candle Corporation (in thousands of dollars) for Year 2 and Year 1 appears below:
**Year 2**
- **Current Assets**:
- Cash: $162
- Accounts Receivable, Net: $192
- Inventory: $142
- Prepaid Expenses: $92
- **Total Current Assets**: $588
- **Current Liabilities**:
- Accounts Payable: $202
- Accrued Liabilities: $32
- Notes Payable, Short Term: $92
- **Total Current Liabilities**: $326
**Year 1**
- **Current Assets**:
- Cash: $100
- Accounts Receivable, Net: $192
- Inventory: $132
- Prepaid Expenses: $92
- **Total Current Assets**: $516
- **Current Liabilities**:
- Accounts Payable: $182
- Accrued Liabilities: $32
- Notes Payable, Short Term: $82
- **Total Current Liabilities**: $296
**Additional Information**:
- Sales on account for the year totaled $1,210 thousand.
- Cost of goods sold was $810 thousand.
**Required Calculations for Year 2**:
a. **Working Capital**: $262 thousand
b. **Current Ratio**: 1.80
c. **Acid-test (Quick) Ratio**: 1.09
d. **Accounts Receivable Turnover**:
e. **Average Collection Period**: 57.9 days
f. **Inventory Turnover**: 5.91 times
g. **Average Sale Period**: 61.7 days
**Explanation of Calculations**:
- **Working Capital**: Calculated as total current assets minus total current liabilities.
- **Current Ratio**: Total current assets divided by total current liabilities.
- **Acid-test Ratio**: (Cash + Accounts Receivable) divided by total current liabilities, excluding inventory.
- **Accounts Receivable Turnover**: Net sales divided by average accounts receivable.
- **Average Collection Period**: 365 days divided by accounts receivable turnover.
- **Inventory Turnover**: Cost of goods sold divided by average inventory.
- **Average Sale Period](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3cadaab7-0242-405d-ab75-d1a15c225b30%2F6faad21b-ad7e-4c50-818b-eb24bbb9663e%2Fstz4yor_processed.png&w=3840&q=75)
Transcribed Image Text:**Excerpts from Candle Corporation's Balance Sheet**
The balance sheet for Candle Corporation (in thousands of dollars) for Year 2 and Year 1 appears below:
**Year 2**
- **Current Assets**:
- Cash: $162
- Accounts Receivable, Net: $192
- Inventory: $142
- Prepaid Expenses: $92
- **Total Current Assets**: $588
- **Current Liabilities**:
- Accounts Payable: $202
- Accrued Liabilities: $32
- Notes Payable, Short Term: $92
- **Total Current Liabilities**: $326
**Year 1**
- **Current Assets**:
- Cash: $100
- Accounts Receivable, Net: $192
- Inventory: $132
- Prepaid Expenses: $92
- **Total Current Assets**: $516
- **Current Liabilities**:
- Accounts Payable: $182
- Accrued Liabilities: $32
- Notes Payable, Short Term: $82
- **Total Current Liabilities**: $296
**Additional Information**:
- Sales on account for the year totaled $1,210 thousand.
- Cost of goods sold was $810 thousand.
**Required Calculations for Year 2**:
a. **Working Capital**: $262 thousand
b. **Current Ratio**: 1.80
c. **Acid-test (Quick) Ratio**: 1.09
d. **Accounts Receivable Turnover**:
e. **Average Collection Period**: 57.9 days
f. **Inventory Turnover**: 5.91 times
g. **Average Sale Period**: 61.7 days
**Explanation of Calculations**:
- **Working Capital**: Calculated as total current assets minus total current liabilities.
- **Current Ratio**: Total current assets divided by total current liabilities.
- **Acid-test Ratio**: (Cash + Accounts Receivable) divided by total current liabilities, excluding inventory.
- **Accounts Receivable Turnover**: Net sales divided by average accounts receivable.
- **Average Collection Period**: 365 days divided by accounts receivable turnover.
- **Inventory Turnover**: Cost of goods sold divided by average inventory.
- **Average Sale Period
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