**Required Information***[The following information applies to the questions displayed below.]***Simon Company's Year-End Balance Sheets****At December 31**| | Current Year | 1 Year Ago | 2 Years Ago ||---------------------|--------------|------------|-------------|| **Assets** | | | || Cash | $ 26,605 | $ 31,099 | $ 32,725 || Accounts receivable, net | $ 89,200 | $ 62,900 | $ 50,800 || Merchandise inventory | $ 114,500 | $ 85,000 | $ 58,000 || Prepaid expenses | $ 8,568 | $ 8,163 | $ 3,636 || Plant assets, net | $ 221,258 | $ 209,503 | $ 192,139 || **Total assets** | $ 460,131 | $ 396,665 | $ 337,300 |**Liabilities and Equity**| | Current Year | 1 Year Ago | 2 Years Ago ||---------------------|--------------|------------|-------------|| Accounts payable | $ 112,281 | $ 65,696 | $ 43,633 || Long-term notes payable | $ 84,775 | $ 89,408 | $ 73,052 || Common stock, $10 par value | $ 162,500 | $ 162,500 | $ 162,500 || Retained earnings | $ 100,575 | $ 79,061 | $ 58,115 || **Total liabilities and equity** | $ 460,131 | $ 396,665 | $ 337,300 |**The Company's Income Statements for the Current Year and One Year Ago***Assume that all sales are on credit.***For Year Ended December 31**| | Current Year | 1 Year Ago ||--------------------------|--------------|-------------|| Sales | $ 598,170 | $ 472,031 || Cost of goods sold | $ 364,884 | $ 306,820 || Other operating expenses | $ 185,433 | $ ### Exercise: Compute Inventory Turnover**Task 3-a**: Compute inventory turnover. **Task 3-b**: For each ratio, determine if it improved or worsened in the current year.Complete this question by entering your answers in the tabs below.#### Instructions- **Compute Inventory Turnover** A table is provided to assist with calculating the inventory turnover ratio. - **Inventory Turnover Table** - **Column 1: Numerator** - **Column 2: Denominator** - **Column 3: Inventory Turnover Result** - **Current Year:** - Enter the numerator divided by the denominator to find the inventory turnover for the current year. - Result is expressed as a number of times. - **1 Year Ago:** - Enter the numerator divided by the denominator to find the inventory turnover for the previous year. - Result is expressed as a number of times.Move to the next task by clicking on the "Required 3A" or "Required 3B" buttons.#### Analyzing the Inventory TurnoverAfter computing the ratios, determine whether the inventory turnover improved or worsened compared to the previous year. Use the results to make an informed evaluation of inventory management efficiency over time.

Inventory turnover ratio :Inventory turnover ratio indicates the demand for the product & services. A higher inventory turnover ratio and lower days of inventory indicate that the demand for the product & services of the company has increased, therefore the company is now able to sell its product and services quickly.Average inventory = (Beginning inventory + Ending inventory) / 2 Average inventory (Current year) = ($85,000 + $114,500)/ = $99,750 Average inventory (1 year ago) = ($58,000 + $85,000)/ = $71,5003a. Inventory turnover Cost of goods sold / Average inventory = Inventory turnover Current year $364,884 / $99,750 = 3.66 times 1 year ago $306,820 / $71,500 = 4.29 times 3b. Inventory turnover ratio is worsened in the Current year.

Business

Accounting

Simon Company's year-end balance sheets follow. At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable Common stock, $10 par value Retained earnings Total liabilities and equity Current Year $ 26,605 89, 200 114,500 8,568 221, 258 $ 460, 131 Interest expense Income tax expense Total costs and expenses Net income Earnings per share $ 112,281 84,775 162,500 100,575 $ 65,696 89,408 162,500 79,061 $ 460, 131 $ 396,665 1 Year Ago 2 Years Ago $ 31,099 $ 32,725 62,900 50,800 85,000 8,163 209,503 58,000 3,636 192, 139 $ 396,665 $ 337,300 The company's income statements for the current year and one year ago follow. Assume that all sales are on credit: For Year Ended December 31 Sales Cost of goods sold Other operating expenses Current Year $364,884 185,433 10,169 7,776 $ 598,170 $ 43,633 73,052 162,500 58, 115 $ 337,300 568, 262 $ 29,908 $ 1.84 1 Year Ago $ 306,820 119,424 10,857 7,080 $ 472,031 444, 181 $ 27,850 $ 1.71

Simon Company's year-end balance sheets follow. At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable Common stock, $10 par value Retained earnings Total liabilities and equity Current Year $ 26,605 89, 200 114,500 8,568 221, 258 $ 460, 131 Interest expense Income tax expense Total costs and expenses Net income Earnings per share $ 112,281 84,775 162,500 100,575 $ 65,696 89,408 162,500 79,061 $ 460, 131 $ 396,665 1 Year Ago 2 Years Ago $ 31,099 $ 32,725 62,900 50,800 85,000 8,163 209,503 58,000 3,636 192, 139 $ 396,665 $ 337,300 The company's income statements for the current year and one year ago follow. Assume that all sales are on credit: For Year Ended December 31 Sales Cost of goods sold Other operating expenses Current Year $364,884 185,433 10,169 7,776 $ 598,170 $ 43,633 73,052 162,500 58, 115 $ 337,300 568, 262 $ 29,908 $ 1.84 1 Year Ago $ 306,820 119,424 10,857 7,080 $ 472,031 444, 181 $ 27,850 $ 1.71

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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