Summary information from the financial statements of two companies competing in the same industry follows. Barco Company Kyan Company Barco Company Kyan Company Data from the current year-end balance sheets Data from the current year’s income statement Assets Sales $ 770,000 $ 927,200 Cash $ 20,000 $ 35,000 Cost of goods sold 587,100 636,500 Accounts receivable, net 40,400 59,400 Interest expense 8,400 14,000 Merchandise inventory 84,940 130,500 Income tax expense 14,800 25,597 Prepaid expenses 5,500 7,450 Net income 159,700 251,103 Plant assets, net 340,000 309,400 Basic earnings per share 3.80 6.09 Total assets $ 490,840 $ 541,750 Cash dividends per share 3.72 4.01 Liabilities and Equity Beginning-of-year balance sheet data Current liabilities $ 69,340 $ 103,300 Accounts receivable, net $ 25,800 $ 51,200 Long-term notes payable 79,800 113,000 Merchandise inventory 65,600 117,400 Common stock, $5 par value 210,000 206,000 Total assets 408,000 372,500 Retained earnings 131,700 119,450 Common stock, $5 par value 210,000 206,000 Total liabilities and equity $ 490,840 $ 541,750 Retained earnings 128,240 33,559 1. For both companies compute the: (d) inventory turnover, (e) days’ sales in inventory, and (f) days’ sales uncollected.

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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Summary information from the financial statements of two companies competing in the same industry follows.

	Barco Company	Kyan Company		Barco Company	Kyan Company
Data from the current year-end balance sheets			Data from the current year’s income statement
Assets			Sales	$ 770,000	$ 927,200
Cash	$ 20,000	$ 35,000	Cost of goods sold	587,100	636,500
Accounts receivable, net	40,400	59,400	Interest expense	8,400	14,000
Merchandise inventory	84,940	130,500	Income tax expense	14,800	25,597
Prepaid expenses	5,500	7,450	Net income	159,700	251,103
Plant assets, net	340,000	309,400	Basic earnings per share	3.80	6.09
Total assets	$ 490,840	$ 541,750	Cash dividends per share	3.72	4.01
Liabilities and Equity			Beginning-of-year balance sheet data
Current liabilities	$ 69,340	$ 103,300	Accounts receivable, net	$ 25,800	$ 51,200
Long-term notes payable	79,800	113,000	Merchandise inventory	65,600	117,400
Common stock, $5 par value	210,000	206,000	Total assets	408,000	372,500
Retained earnings	131,700	119,450	Common stock, $5 par value	210,000	206,000
Total liabilities and equity	$ 490,840	$ 541,750	Retained earnings	128,240	33,559

1. For both companies compute the:

(d) inventory turnover, (e) days’ sales in inventory, and (f) days’ sales uncollected.

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