Selected data from Thornton Company follow.Balance SheetsAs of December 31Year 2$377,000(15,080)$361,920Year 3$393,000(19,650)Accounts receivableAllowance for doubtful accountsNet accounts receivable$373,350Inventories, lower of cost or market$477,000$434,000Income StatementFor the Years Ended December 31Year 3Year 2Net credit salesNet cash sales$2,004,000400,000$1,753,000307,000Net sales2,404,0002,060,000Cost of goods soldSelling, general, and administrative expensesOther expenses1,602,000240,30040,200$1,882,5001,420,000214,30024,000Total operating expenses$1,658,300Requireda. Compute the accounts receivable turnover for Year 3.b. Compute the inventory turnover for Year 3.c. Compute the net margin for Year 2.(For all requirements, round your answers to 2 decimal places.)a. Accounts receivable turnovertimesb. Inventory turnovertimesc. Net margin%

Net Profit margin = Net Profit/Total revenue x 100Accounts receivable turnover =Net credit sales/Average accounts receivable For year 3 = 2404000/385000 =6.24 times Where, Average accounts receivable= (Beginning accounts receivable + ending accounts receivable)/2 =(377000+393000)/2 =385000Inventory Turnover Ratio = Cost of Goods Sold/Average Inventory For year 3 = 1420000/455500 = 3.12 times Where average inventory =(Beginning Inventory + ending inventory)/2 = (434000+477000)/2 = 455500Net margin = Net Profit/Total revenue x 100 For year 2 = 401700/2060000 ×100 = 19.5% Net margin = Net sales - Total operating expenses = 2060000 - 1658300 = 401700

Business

Accounting

Selected data from Thornton Company follow. Balance Sheets As of December 31 Year 3 Year 2 Accounts receivable Allowance for doubtful accounts $393,000 (19,650) $373,350 $377,000 (15,080) $361,920 Net accounts receivable Inventories, lower of cost or market $477,000 $434,000 Ingom o Stat ement

Selected data from Thornton Company follow. Balance Sheets As of December 31 Year 3 Year 2 Accounts receivable Allowance for doubtful accounts $393,000 (19,650) $373,350 $377,000 (15,080) $361,920 Net accounts receivable Inventories, lower of cost or market $477,000 $434,000 Ingom o Stat ement

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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