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Review the select information for Bean Superstore and Legumes Plus (industry competitors), and then complete the following. Compute the accounts receivable turnover ratios for each company for 2018 and 2019. Compute the number of days’ sales in receivables ratios for each company for 2018 and 2019. Determine which company is the better investment and why. Round answers to two decimal places.

Review the select information for Bean Superstore and Legumes Plus (industry competitors), and then complete the following. Compute the accounts receivable turnover ratios for each company for 2018 and 2019. Compute the number of days’ sales in receivables ratios for each company for 2018 and 2019. Determine which company is the better investment and why. Round answers to two decimal places.

FINANCIAL ACCOUNTING
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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Review the select information for Bean Superstore and Legumes Plus (industry competitors), and then complete the following.

  1. Compute the accounts receivable turnover ratios for each company for 2018 and 2019.
  2. Compute the number of days’ sales in receivables ratios for each company for 2018 and 2019.
  3. Determine which company is the better investment and why. Round answers to two decimal places.
**BEAN SUPERSTORE** *Comparative Balance Sheet* **December 31, 2017, 2018, and 2019** **2019** **Assets** - Cash: $345,600 - Accounts Receivable: $67,000 - Inventory: $145,830 - Equipment: $100,465 **Total Assets**: $658,895 **Liabilities** - Salaries Payable: $90,200 - Accounts Payable: $70,000 - Notes Payable: $41,000 **Equity** - Common Stock: $22,695 - Retained Earnings: $435,000 **Total Liabilities and Equity**: $658,895 **2018** **Assets** - Cash: $330,460 - Accounts Receivable: $62,000 - Inventory: $178,011 - Equipment: $101,202 **Total Assets**: $671,673 **Liabilities** - Salaries Payable: $88,563 - Accounts Payable: $71,670 - Notes Payable: $50,650 **Equity** - Common Stock: $20,990 - Retained Earnings: $439,800 **Total Liabilities and Equity**: $671,673 **2017** **Assets** - Cash: $300,000 - Accounts Receivable: $59,000 - Inventory: $155,205 - Equipment: $103,085 **Total Assets**: $617,290 **Liabilities** - Salaries Payable: $84,209 - Accounts Payable: $69,331 - Notes Payable: $58,250 **Equity** - Common Stock: $19,100 - Retained Earnings: $386,400 **Total Liabilities and Equity**: $617,290 --- **LEGUMES PLUS** *Comparative Balance Sheet* **December 31, 2017, 2018, and 2019** **2019** **Assets** - Cash: $407,000 - Accounts Receivable: $85,430 - Inventory: $128,080 - Equipment: $182,006 **Total Assets**: $802,516 **Liabilities** - Salaries Payable: $95,100 - Accounts Payable: $62
Transcribed Image Text:**BEAN SUPERSTORE** *Comparative Balance Sheet* **December 31, 2017, 2018, and 2019** **2019** **Assets** - Cash: $345,600 - Accounts Receivable: $67,000 - Inventory: $145,830 - Equipment: $100,465 **Total Assets**: $658,895 **Liabilities** - Salaries Payable: $90,200 - Accounts Payable: $70,000 - Notes Payable: $41,000 **Equity** - Common Stock: $22,695 - Retained Earnings: $435,000 **Total Liabilities and Equity**: $658,895 **2018** **Assets** - Cash: $330,460 - Accounts Receivable: $62,000 - Inventory: $178,011 - Equipment: $101,202 **Total Assets**: $671,673 **Liabilities** - Salaries Payable: $88,563 - Accounts Payable: $71,670 - Notes Payable: $50,650 **Equity** - Common Stock: $20,990 - Retained Earnings: $439,800 **Total Liabilities and Equity**: $671,673 **2017** **Assets** - Cash: $300,000 - Accounts Receivable: $59,000 - Inventory: $155,205 - Equipment: $103,085 **Total Assets**: $617,290 **Liabilities** - Salaries Payable: $84,209 - Accounts Payable: $69,331 - Notes Payable: $58,250 **Equity** - Common Stock: $19,100 - Retained Earnings: $386,400 **Total Liabilities and Equity**: $617,290 --- **LEGUMES PLUS** *Comparative Balance Sheet* **December 31, 2017, 2018, and 2019** **2019** **Assets** - Cash: $407,000 - Accounts Receivable: $85,430 - Inventory: $128,080 - Equipment: $182,006 **Total Assets**: $802,516 **Liabilities** - Salaries Payable: $95,100 - Accounts Payable: $62
### BEAN SUPERSTORE **Comparative Income Statement** *Year Ended December 31, 2017, 2018, and 2019* | | 2019 | 2018 | 2017 | |-------|-----------|-----------|-----------| | Net Credit Sales | $1,000,000 | $984,400 | $875,350 | | Cost of Goods Sold | $450,000 | $419,600 | $388,950 | | Gross Margin | $550,000 | $564,800 | $486,400 | | Expenses | $115,000 | $125,000 | $100,000 | | Net Income (Loss) | $435,000 | $439,800 | $386,400 | ### LEGUMES PLUS **Comparative Income Statement** *Year Ended December 31, 2017, 2018, and 2019* | | 2019 | 2018 | 2017 | |-------|-----------|-----------|-----------| | Net Credit Sales | $1,256,300 | $1,020,570 | $967,478 | | Cost of Goods Sold | $500,000 | $580,320 | $465,780 | | Gross Margin | $756,300 | $440,250 | $501,698 | | Expenses | $200,000 | $175,450 | $169,422 | | Net Income (Loss) | $556,300 | $264,800 | $332,276 | In summary, Bean Superstore shows a consistent increase in net credit sales and net income over the three years. Legumes Plus shows a significant jump in gross margin and net income in 2019 compared to the previous years.
Transcribed Image Text:### BEAN SUPERSTORE **Comparative Income Statement** *Year Ended December 31, 2017, 2018, and 2019* | | 2019 | 2018 | 2017 | |-------|-----------|-----------|-----------| | Net Credit Sales | $1,000,000 | $984,400 | $875,350 | | Cost of Goods Sold | $450,000 | $419,600 | $388,950 | | Gross Margin | $550,000 | $564,800 | $486,400 | | Expenses | $115,000 | $125,000 | $100,000 | | Net Income (Loss) | $435,000 | $439,800 | $386,400 | ### LEGUMES PLUS **Comparative Income Statement** *Year Ended December 31, 2017, 2018, and 2019* | | 2019 | 2018 | 2017 | |-------|-----------|-----------|-----------| | Net Credit Sales | $1,256,300 | $1,020,570 | $967,478 | | Cost of Goods Sold | $500,000 | $580,320 | $465,780 | | Gross Margin | $756,300 | $440,250 | $501,698 | | Expenses | $200,000 | $175,450 | $169,422 | | Net Income (Loss) | $556,300 | $264,800 | $332,276 | In summary, Bean Superstore shows a consistent increase in net credit sales and net income over the three years. Legumes Plus shows a significant jump in gross margin and net income in 2019 compared to the previous years.
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