FINANCIAL & MANAGERIAL ACCOUNTING (ACCES
9th Edition
ISBN: 9781265484040
Author: Wild
Publisher: MCG
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When analyzing financial statements, what can you conclude when the inventory turnover ratio increases from 4.0 to 6.0 over a three year period.
Group of answer choices
a. The day’s inventory held are within the typical industry average
b. The day’s inventory held has increased over time
None of the above
c. The day’s inventory held has decreased over time
A manufacturer reported an inventory turnover ratio of 8.6 last year. During the current year, management introduced a new inventory control system that was expected to reduce average inventorylevels by 25 percent without affecting sales volume. Given these circumstances, would you expectthe inventory turnover ratio to increase or decrease during the current year? Explain.
Selected comparative financial statements of Haroun Company follow.
HAROUN COMPANY
Comparative Income Statements
For Years Ended December 31, 2021-2015
($ thousands)
Sales
2021
Cost of goods sold
$ 1,769
1,271
2020
$ 1,549
2019
2018
2017
2016
2015
$ 1,410
$ 1,292
$ 1,206
$ 1,121
$ 919
1,034
889
778
723
676
539
Gross profit
498
515
521
514
483
445
380
Operating expenses
Net income
377
295
271
200
173
171
142
$ 121
$ 220
$ 250
$ 314
$ 310
$ 274
$ 238
HAROUN COMPANY
Comparative Year-End Balance Sheets
December 31, 2021-2015
($ thousands)
Assets
Cash
Accounts receivable, net
Merchandise inventory
Other current assets
Long-term investments
Plant assets, net
Total assets
Liabilities and Equity
2021
2020
2019
2018
2017
2016
2015
$ 108
773
$ 142
812
$ 148
735
2,797
2,036
1,779
$ 151
564
1,499
$ 157
496
$ 155
$ 160
470
332
1,346
1,144
829
72
65
40
71
60
61
32
e
B
220
220
220
220
3,422
3,409
2,982
1,683
$ 7,172
$ 6,464
$ 5,684
$ 4,188
$ 4,019
1,740
1,546
$ 3,596
$ 2,900
1,327
Current liabilities…
Chapter 5 Solutions
FINANCIAL & MANAGERIAL ACCOUNTING (ACCES
Ch. 5 - Prob. 1QSCh. 5 - Prob. 2QSCh. 5 - Prob. 3QSCh. 5 - Prob. 4QSCh. 5 - Perpetual: Inventory costing with FIFO P1 A...Ch. 5 - Prob. 6QSCh. 5 - Prob. 7QSCh. 5 - Prob. 8QSCh. 5 - Prob. 9QSCh. 5 - A Periodic: Inventory costing with weighted...
Ch. 5 - Prob. 11QSCh. 5 - Prob. 12QSCh. 5 - Perpetual: Inventory costing with weighted average...Ch. 5 - Prob. 14QSCh. 5 - Prob. 15QSCh. 5 - Prob. 16QSCh. 5 - Prob. 17QSCh. 5 - Prob. 18QSCh. 5 - Prob. 19QSCh. 5 - Prob. 20QSCh. 5 - Prob. 21QSCh. 5 - Prob. 22QSCh. 5 - Prob. 23QSCh. 5 - Prob. 24QSCh. 5 - Prob. 25QSCh. 5 - Prob. 26QSCh. 5 - Prob. 1ECh. 5 - Prob. 2ECh. 5 - Exercise 5-3 Perpetual: Inventory costing methods...Ch. 5 - Prob. 4ECh. 5 - Prob. 5ECh. 5 - Prob. 6ECh. 5 - Prob. 7ECh. 5 - Prob. 8ECh. 5 - Prob. 9ECh. 5 - Prob. 10ECh. 5 - Prob. 11ECh. 5 - Prob. 12ECh. 5 - Prob. 13ECh. 5 - Prob. 14ECh. 5 - Prob. 15ECh. 5 - Prob. 16ECh. 5 - Prob. 17ECh. 5 - Prob. 18ECh. 5 - Prob. 19ECh. 5 - Prob. 20ECh. 5 - Prob. 21ECh. 5 - Prob. 1PSACh. 5 - Prob. 2PSACh. 5 - Prob. 3PSACh. 5 - Problem 5-4AA Periodic: Alternative cost flows...Ch. 5 - Prob. 5PSACh. 5 - Prob. 6PSACh. 5 - Prob. 7PSACh. 5 - Prob. 8PSACh. 5 - Prob. 9PSACh. 5 - Prob. 10PSACh. 5 - Prob. 1PSBCh. 5 - Prob. 2PSBCh. 5 - Prob. 3PSBCh. 5 - Prob. 4PSBCh. 5 - Prob. 5PSBCh. 5 - Prob. 6PSBCh. 5 - Prob. 7PSBCh. 5 - Problem 5-8BA Periodic: Income comparisons and...Ch. 5 - Prob. 9PSBCh. 5 - Prob. 10PSBCh. 5 - Prob. 5SPCh. 5 - Prob. 1.1AACh. 5 - Prob. 1.2AACh. 5 - Prob. 1.3AACh. 5 - Prob. 1.4AACh. 5 - Prob. 2.1AACh. 5 - Prob. 2.2AACh. 5 - Prob. 2.3AACh. 5 - Prob. 3.1AACh. 5 - Prob. 3.2AACh. 5 - Prob. 3.3AACh. 5 - Describe how costs flow inventory to cost of goods...Ch. 5 - Where is the amount of merchandise inventory...Ch. 5 - Prob. 3DQCh. 5 - Prob. 4DQCh. 5 - Prob. 5DQCh. 5 - Prob. 6DQCh. 5 - What factors contribute to (or cause) inventory...Ch. 5 - Prob. 8DQCh. 5 - Prob. 1BTNCh. 5 - Prob. 2BTNCh. 5 - Prob. 3BTNCh. 5 - Prob. 5BTN
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Similar questions
- Financial statement data for years ending December 31 for Holland Company follow: a. Determine the inventory turnover for 20Y4 and 20Y3. b. Determine the days sales in inventory for 20Y4 and 20Y3. Use 365 days and round to one decimal place. c. Does the change in inventory turnover and the days sales in inventory from 20Y3 to 20Y4 indicate a favorable or an unfavorable trend?arrow_forwardLast year, Nikkola Company had net sales of 2,299,500,000 and cost of goods sold of 1,755,000,000. Nikkola had the following balances: Refer to the information for Nikkola Company above. Required: Note: Round answers to one decimal place. 1. Calculate the average inventory. 2. Calculate the inventory turnover ratio. 3. Calculate the inventory turnover in days. 4. CONCEPTUAL CONNECTION Based on these ratios, does Nikkola appear to be performing well or poorly?arrow_forward15. Farrell's Window Supply has seen an increase in sales, but the company is concerned with its inventory management. Has the increase in sales caused the company's ability to manage inventory effectively to decrease? Support your answer by finding the changes in inventory turnover and number of days' sales in inventory. Round ratios to one decimal place. Inventory: Beginning of year End of year Purchases of inventory 20Y6 2015 $350,900 $352,300 325,400 350,900 330,600 325,200 shulpsins, of woted notandin YOS has 2Y02 dinaarrow_forward
- The following data were extracted from the income statement of Keever Inc.: Current Year Previous Year Sales $788,400 $827,800 Beginning inventories 57,564 39,692 Cost of goods sold 394,200 459,900 Ending inventories 52,164 57,564 a. Determine for each year (1) the inventory turnover and (2) the number of days' sales in inventory. Round interim calculations to the nearest dollar and the final answers to one decimal place. Assume 365 days a year. Current Year Previous Year 1. Inventory turnover fill in the blank 1 fill in the blank 2 2. Number of days' sales in inventory fill in the blank 3 days fill in the blank 4 days b. The inventory position of the business has improveddeteriorated . The inventory turnover has increaseddecreased , while the number of days' sales in inventory has increaseddecreased .arrow_forwardThe following data were extracted from the income statement of Keever Inc.: Current Year Previous Year Sales $1,518,400 $1,589,900 Beginning inventories 88,856 81,230 Cost of goods sold 759,200 883,300 Ending inventories 80,456 88,856 a. Determine for each year (1) the inventory turnover and (2) the number of days' sales in inventory. Round interim calculations to the nearest dollar and the final answers to one decimal place. Assume 365 days a year. Current Year Previous Year 1. Inventory turnover fill in the blank 1 fill in the blank 2 2. Number of days' sales in inventoryarrow_forwardWhat is the comparison (analysis) of the Inventory Turnover Ratio of Industry Average Ratio and the Company A Ratio? The Inventory Turnover Ratio has decreased and increased. Why? Industry Average Inventory Turnover Ratio 2015: 5.89 2016: 4.95 2017: 5.51 2018: 8.20 2019: 10.28 Company A Inventory Turnover Ratio 2015: 4.34 2016: 3.15 2017: 4.76 2018: 2.94 2019: 5.32arrow_forward
- Accounts Debit Credit Cash $24,300 Accounts Receivable 42,500 Allowance for Uncollectible Accounts $2,700 Inventory 42,000 Land 79,600 Accounts Payable 29,200 Notes Payable (8%, due in 3 years) 42,000 Common Stock 68,000 Retained Earnings 46,500 Totals $188,400 $188,400 The $42,000 beginning balance of inventory consists of 420 units, each costing $100. During January 2024, Big Blast Fireworks had the following inventory transactions: January 3 Purchase 1,050 units for $115,500 on account ($110 each). January 8 Purchase 1,150 units for $132,250 on account ($115 each). January 12 Purchase 1,250 units for $150,000 on account ($120 each). January 15 Return 160 of the units purchased on January 12 because of defects. January 19 Sell 3,600 units on account for $576,000. The cost of the units sold is determined using a FIFO perpetual inventory system. January 22 Receive $529,000 from customers on accounts receivable. January 24 Pay $359,000 to inventory suppliers on accounts payable. January…arrow_forwardBased on the following data for the current year, what is the number of days' sales in inventory? Assume 365-day year. Sales on account during year $451,116 Cost of goods sold during year 180,647 Accounts receivable, beginning of year 48,852 Accounts receivable, end of year 50,382 Inventory, beginning of year 37,064 Inventory, end of year 43,184 Do not round interim calculations. Round your final answer up to the nearest whole day. Oa. 5 Оb. 365 Ос. 100 Od. 81arrow_forwardThe following data were extracted from the income statement of Shriver Inc.: Current Year Prior Year Sales $1,168,000 $1,222,000 Beginning inventories 70,440 58,326 Cost of merchandise sold 584,000 678,900 Ending inventories 63,640 70,440 a. Determine for each year (1) the inventory turnover and (2) the number of days' sales in inventory. Round interim calculations to the nearest dollar and the final answers to one decimal place. Assume 365 days a year. Current Year Prior Year 1. Inventory turnover 2. Number of days' sales in inventory days days b. The inventory position of the business has The inventory turnover has while the number of days' sales in inventory hasarrow_forward
- Based on the data in Table 11.10, you have been asked to determine:a) The company's percentage of assets committed to inventory last year.b) The company's percentage of assets committed to inventory this year.c) The change in the percentage of assets committed to inventory.arrow_forwardCalculating Gross Profit and Inventory TurnoverThe following table presents, sales, revenue, cost of goods sold, and inventory for 3 companies: Samsung, HP & Apple.a. Compute the gross profit margin (GPM) for each of these companies for all 3 yearsb. Compute the inventory turnover ratio and the average inventory days outstanding for each company for the last two fiscal year using FIFO inventory costingc. What factors might determine the differences among these 3 companies’ ratios? ($millions) Fiscal year endingSamsung (Korean won) 12/31/2014 12//2013 12/31/2012Revenue 206,205,987 228,692,667 201,103,613COGS 128,278,800 137,696,309 126,651,931Inventory 17,317,504 19,134,868 17,747,413 HP (US Dollar) 10/31/2014 10/31/2013 10/31/2012Revenue (products only) 73,726…arrow_forwardThe following data were taken from the income statements of MetronixCorporation. Compute the inventory-turnover ratio for each year. What conclusions concerning the management of the inventory can be drawn from the data?arrow_forward
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