FINANCIAL ACCT-CONNECT
FINANCIAL ACCT-CONNECT
8th Edition
ISBN: 9781266627903
Author: Wild
Publisher: INTER MCG
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Chapter 6, Problem 9BTN

1

Summary Introduction

Introduction: Percentage representation of cash in terms of current assets and total assets is used to identify the immediate availability of liquidity in the organization. The percentage representation of cash in terms of current liabilities is to identify the immediate pay off of liabilities available in the organization.

To Determine: Percentage that cash represents of current assets, total assets, current liabilities and shareholder equity for each year

1

Expert Solution
Check Mark

Answer to Problem 9BTN

    ParticularsCurrent YearPrior Year
    Cash that represents current assets14.6%14.7%
    Cash that represents total assets7.3%7.6%
    Cash that represents current Liabilities32.4%31.7%
    Cash that represents Shareholders’ Equity10.0%10.8%

Explanation of Solution

Computation of percentage that cash represents of current assets, total assets, current liability and shareholders’ equity.

a. Cash that represents current assets = CashCurrentAssetsX100

b. Cash that represents total assets = CashTotalAssetsX100

c. Cash that represents current liabilities = CashCurrentLiabilitiesX100

d. Cash that represents Shareholders Equity = CashShareholdersÉquityX100

    ParticularsCurrent YearPrior Year
    Cash ₩16,840,766₩16,284,780
    Current Assets ₩115,146,026₩110,760,271
    Cash that represents current assets

      16,840,766115,146,026X100

      16,284,780110,760,271X100

    Answer14.6%14.7%
    Total Assets ₩230,422,958₩214,075,018
    Cash that represents total assets

      16,840,766230,422,958X100

      16,284,780214,750,018X100

    Answer7.3%7.6%
    Current Liabilities₩52,013,913₩51,315,409
    Cash that represents current Liabilities

      16,840,76652,013,913X100

      16,284,78051,315,409X100

    Answer32.4%31.7%
    Shareholders’ Equity₩168,088,188₩150,016,010
    Cash that represents Shareholders’ Equity

      16,840,766168,088,188X100

      16,284,780150,016,010X100

    Answer10.0%10.8%

Comment on the trend of the percentage

From the above table, the conclusion can be drawn that there is no major change in the percentage that represents the current assets, total assets, current liabilities and shareholders’ Equity.

2

Summary Introduction

Introduction: To identify the difference between the cash balance of current and prior year, whether there has been an increase or decrease in the cash balance the percentage is calculated taking the prior year as the base.

To Determine:Percentage change in current and prior year cash balances

2

Expert Solution
Check Mark

Answer to Problem 9BTN

Therefore, percentage change in cash balance is 3.4%.

Explanation of Solution

Percentage change in current and prior year cash balances Difference in cash Balance of current and previous year =₩16,840,766-₩16,284,780

   = ₩555,986

Percentage change in cash balance = 555,98616,284,780X100

   = 3.4%

3

Summary Introduction

Introduction: Days of Sales uncollected is calculated to identify the time by accounts receivable to settle the amount overdue

To Determine: Days Sales uncollected at the end of both the current and the prior year.

3

Expert Solution
Check Mark

Answer to Problem 9BTN

Days Sales uncollected for current year is 50 days.

Days Sales uncollected of Prior year is 45 days, approx.

Explanation of Solution

Days Sales uncollected at the end of both the current and the prior year.

Days Sales uncollected is calculated by using formula = AccountsReceivableNetsalesX365

Days Sales uncollected for current year = 28,234,485206,205,987X365

  = 50 days

Days Sales uncollected of Prior year = 27,875,934228,692,667X365

  = 44.5 days

The day’s sales uncollected has increased by 5.5 days approximately. There has been an increase in accounts receivable but net sales have declined from the previous year. So there has been no improvement in the number of days’ sales uncollected.

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