Selected data from Fanning Company follow: Balance SheetsAs of December 31 Year 3 Year 2Accounts receivable$392,000 $375,000 Allowance for doubtful accounts (19,600) (15,000)Net accounts receivable$372,400 $360,000 Inventories, lower of cost or market$478,000 $431,000 Income StatementFor the Years Ended December 31 Year 3 Year 2Net credit sales$2,019,000 $1,753,000 Net cash sales 408,000 314,000 Net sales 2,427,000 2,067,000 Cost of goods sold 1,602,000 1,434,000 Selling, general, and administrative expenses 239,600 214,500 Other expenses 39,600 22,100 Total operating expenses$1,881,200 $1,670,600 Requireda. Compute the accounts receivable turnover for Year 3.b. Compute the inventory turnover for Year 3.c. Compute the net margin for Year 2.

A financial ratio or accounting ratio is a relative magnitude of two selected numerical values taken…

Answered: Selected data from Fanning Company…

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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Selected data from Fanning Company follow:

Balance Sheets As of December 31
	Year 3		Year 2
Accounts receivable	$	392,000		$	375,000
Allowance for doubtful accounts		(19,600	)		(15,000	)
Net accounts receivable	$	372,400		$	360,000
Inventories, lower of cost or market	$	478,000		$	431,000

Income Statement For the Years Ended December 31
	Year 3		Year 2
Net credit sales	$	2,019,000		$	1,753,000
Net cash sales		408,000			314,000
Net sales		2,427,000			2,067,000
Cost of goods sold		1,602,000			1,434,000
Selling, general, and administrative expenses		239,600			214,500
Other expenses		39,600			22,100
Total operating expenses	$	1,881,200		$	1,670,600

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.

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