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- 1. Consider the following data determined from the financial statements of a major retailer: Inventory turnover = 75 days Days' sales outstanding = 30 Days' purchases outstanding = 50 Which of the following statements is correct? A.All of these statements are correct. B.On average, the company pays its suppliers 55 days before it collects cash from its customers. C.On average, the company sells the inventory 45 days before it collects cash from its customers. D.On average, the company collects cash from its customers 20 days before it pays its suppliers. E.On average, the company purchases its inventory 25 days before it sells it. 2. Which of the following would explain why Payments to suppliers and employees for the period is greater than Total operating expenses for the period? A.Significant impairments of non-current assets during the period. B.Significant levels of prepaid expenses at the end of the period. C.Significant levels of trade payables at the end of the period.…Dryden Company is an auto parts supplier. At the end of each month, the employee who maintains all of the inventory records takes a physical inventory of the firm’s stock. When discrepancies occur between the recorded inventory and the physical count, the employee changes the physical count to agree with the records.Required:1. What problems could arise as a result of Dryden Company’s inventory procedures?2. How could the internal control system be strengthened to eliminate the potential problems?Your client counts inventory three months before the end of the fiscal year because controls over inventory are excellent. Which procedure is not necessary for the roll-forward?a. Check that shipping documents for the last three months agree with perpetual records.b. Trace receiving reports for the last three months to perpetual records.c. Compare gross margin percentages for the last three months.d. Request the client to recount inventory at the end of the year.
- Financial statement data for years ending December 31 for Tango Company follow: a. Determine the inventory turnover for 20Y7 and 20Y6. b. Determine the days sales in inventory for 20Y7 and 20Y6. Use 365 days and round to one decimal place. c. Does the change in inventory turnover and the days sales in inventory from 20Y6 to 20Y7 indicate a favorable or an unfavorable trend?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?The company wants to ascertain the closing stock using the three possible methods (FIFO, LIFO and the weighted average). Information as follows: January bought 12 items at $40 each; May sold 8 at $52 each ,April bought 12 at $36 each; November sold 24 at $60 each and October bought 21 at$40 each. Required: a) Closing stock using the FIFO methods b) Cost of goods sold using the FIFO method. c) Profit or loss using the FIFO method. d) Sales/ Revenue using the FIFO method
- You are tasked to perform cut-off procedures for expenses and its related payable. In testing the completeness/cut-off assertion, what document would you most likely inspect? A. Vendor invoice register 15 days before and 15 days after report date. B. Cash disbursement journal 15 days before and 15 days after report date. C. Accounts payabie subsidiary ledger. D. Purchase journal 15 days before and 15 days after report date.The company wants to ascertain the closing stock using the three possible methods (FIFO, LIFO and the weighted average). Information as follows: January bought 12 items at $40 each; May sold 8 at $52 each ,April bought 12 at $36 each; November sold 24 at $60 each and October bought 21 at$40 each. Required: a) Closing stock using the FIFO methods b) Cost of goods sold using the FIFO method. c) Profit or loss using the FIFO method.Which of the following reflects strong internal control? The person who opens the mail also makes the journal entry to record any customer payments received by mail. It takes two days to get a cheque written because of the approvals required. A company ships goods to customers right before year-end even though the customers have not ordered them. Physical inventory counts are not performed because the company uses a perpetual inventory system.
- Ravilero Ltd uses the periodic inventory system and has control accounts and subsidiary ledgers for trade receivables and payables. The general ledger control account balances at 1 June 2019 were: Accounts receivable control $123,470 Accounts payable control 144,800 The following transactions took place during June: Credit inventory sales for the month $161,970 Cash inventory purchases for the month 117,020 Credit inventory purchases for the month 82,040 Cash payments to creditors for the month 161,120 Discount received for the month 3,820 Discount allowed for the month 2,970 Cash receipts from customers for the month 164,720 Cash inventory sales for the month 11,870 June 8: Goods (unpaid) returned by customer 11,770 June 11: Bill payable accepted by creditor in respect of balance of account 3,490 June 16: Goods (paid for) returned to supplier and received cash 9,010 June 21: Offset of accounts receivable and payable recorded…Ravilero Ltd uses the periodic inventory system and has control accounts and subsidiary ledgers for trade receivables and payables. The general ledger control account balances at 1 June 2019 were: Accounts receivable control $88,520 Accounts payable control 103,820 The following transactions took place during June: Credit inventory sales for the month $116,130 Cash inventory purchases for the month 83,900 Credit inventory purchases for the month 58,820 Cash payments to creditors for the month 115,520 Discount received for the month 2,740 Discount allowed for the month 2,130 Cash receipts from customers for the month 118,100 Cash inventory sales for the month 8,510 June 8: Goods (unpaid) returned by customer 8,440 June 11: Bill payable accepted by creditor in respect of balance of account 2,500 June 16: Goods (paid for) returned to supplier and received cash 6,460 June 21: Offset of accounts receivable and payable recorded 8,510…Which of the following documents is not often used for inventory control? Vendor's invoice Sales receipt Receiving report Purchase order With a perpetual inventory system, when should a physical count of inventory be taken? Near year-end Mid-year Never; a physical count is not needed with a perpetual inventory system Weekly
