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Using Carrot Corp. What is the Average collection period for year 2?   a. 20 days b. 22.50 days c. 24 days d. 24.50 days

Using Carrot Corp. What is the Average collection period for year 2?   a. 20 days b. 22.50 days c. 24 days d. 24.50 days

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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6. Using Carrot Corp. What is the Average collection period for year 2?
 
a. 20 days
b. 22.50 days
c. 24 days
d. 24.50 days
Financial statements of CARROTS Corporation are reproduced below. The market price of Carrot's ordinary share was P20 per share on November 30, Year 2. Carrots Corporation Statement of Financial Position As of November 30 (in thousands of pesos) Year 2 Year 1 Cash P 3,000 P 2,000 Trading securities Accounts receivable (net) Merchandise inventory 1,000 1,000 14,000 11,000 24,000 16,000 Total current assets P 42,000 P 30,000 Property, plant, and equipment (net) Long-term investments 68,000 60,000 10,000 10,000 Total assets P120,000 P100,000 P 5,000 P 4,000 Accounts payable Wages payable 1,000 1,000 Total current liabilities P 6,000 P 5,000 Bonds payable, 10% 20,000 20,000 P 25,000 P 26,000 P 25,000 Total liabilities Ordinary share capital, no par, 10,000,000 shares Accumulated profits Total shareholders' equity Total liabilities and shareholders' equity P 25,000 69.000 50,000 P 94,000 P 75,000 P120.000 P100,000
Transcribed Image Text:Financial statements of CARROTS Corporation are reproduced below. The market price of Carrot's ordinary share was P20 per share on November 30, Year 2. Carrots Corporation Statement of Financial Position As of November 30 (in thousands of pesos) Year 2 Year 1 Cash P 3,000 P 2,000 Trading securities Accounts receivable (net) Merchandise inventory 1,000 1,000 14,000 11,000 24,000 16,000 Total current assets P 42,000 P 30,000 Property, plant, and equipment (net) Long-term investments 68,000 60,000 10,000 10,000 Total assets P120,000 P100,000 P 5,000 P 4,000 Accounts payable Wages payable 1,000 1,000 Total current liabilities P 6,000 P 5,000 Bonds payable, 10% 20,000 20,000 P 25,000 P 26,000 P 25,000 Total liabilities Ordinary share capital, no par, 10,000,000 shares Accumulated profits Total shareholders' equity Total liabilities and shareholders' equity P 25,000 69.000 50,000 P 94,000 P 75,000 P120.000 P100,000
Carrots Corporation Statement of Income For the Year Ended November 30, Year 2 (in thousands of pesos) Sales (all on credit) Cost of goods sold Gross margin Operating expenses P200,000 (120,000) 80,000 (38,000) Net operating income Interest expense 42,000 (2,000) Net income before income tax 40,000 Income tax expense (15,000) P 25,000 Net income
Transcribed Image Text:Carrots Corporation Statement of Income For the Year Ended November 30, Year 2 (in thousands of pesos) Sales (all on credit) Cost of goods sold Gross margin Operating expenses P200,000 (120,000) 80,000 (38,000) Net operating income Interest expense 42,000 (2,000) Net income before income tax 40,000 Income tax expense (15,000) P 25,000 Net income
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