Accounts Receivable and Inventory Turnover The following data (in millions) were adapted from recent financial statements of Apple Inc (AAPL). Year 2 Year 1 Sales $233,715 $182,795 Cost of goods sold 140,089 112,258 Operating income 71,230 52,503 Average accounts receivable 33,713 27,816 Average inventory 2,230 1,938 1. Compute the accounts receivable turnover for Years 1 and 2. Round to one decimal place. Accounts Receivable Turnover Year 2 fill in the blank Year 1 fill in the blank 2. Compute the number of days' sales in receivables for Years 1 and 2. Assume there are 365 days in a year, and round to nearest day. Number of Days' Sales in Receivables Year 2 ___________ days Year 1 ___________ days 3. Compute the inventory turnover for Years 1 and 2. Round to one decimal place. Inventory Turnover Year 2 fill in the blank Year 1 fill in the blank 4. Compute the number of days' sales in inventory for Years 1 and 2. Assume there are 365 days in a year, and round to nearest day. Number of Days' Sales in Inventory Year 2 ___________ days Year 1 ___________ days 5. Compute the return on sales for Years 1 and 2. Round to one decimal place. Return on Sales Year 2 ___________ % Year 1 ___________ % 6. Apple’s accounts receivable turnover in Year 2 has (decreased or increased) slightly. Days’ sales in receivables has (decreased or increased). This is a (favorable or unfavorable) change. Apple’s inventory turnover in Year 2 has (decreased or increased) slightly. Days’ sales in inventory has (stayed the same or increased) . Apple’s return on sales in Year 2 has (decreased or increased). This a (favorable or unfavorable) change.
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Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
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In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
The following data (in millions) were adapted from recent financial statements of Apple Inc (AAPL).
| Year 2 | Year 1 | |
| Sales | $233,715 | $182,795 |
| Cost of goods sold | 140,089 | 112,258 |
| Operating income | 71,230 | 52,503 |
| Average accounts receivable | 33,713 | 27,816 |
| Average inventory | 2,230 | 1,938 |
1. Compute the accounts receivable turnover for Years 1 and 2. Round to one decimal place.
| Accounts Receivable Turnover | |
| Year 2 | fill in the blank |
| Year 1 | fill in the blank |
2. Compute the number of days' sales in receivables for Years 1 and 2. Assume there are 365 days in a year, and round to nearest day.
| Number of Days' Sales in Receivables |
|
| Year 2 | ___________ days |
| Year 1 | ___________ days |
3. Compute the inventory turnover for Years 1 and 2. Round to one decimal place.
| Inventory Turnover | |
| Year 2 | fill in the blank |
| Year 1 | fill in the blank |
4. Compute the number of days' sales in inventory for Years 1 and 2. Assume there are 365 days in a year, and round to nearest day.
| Number of Days' Sales in Inventory |
|
| Year 2 | ___________ days |
| Year 1 | ___________ days |
5. Compute the return on sales for Years 1 and 2. Round to one decimal place.
| Return on Sales | |
| Year 2 | ___________ % |
| Year 1 | ___________ % |
6. Apple’s accounts receivable turnover in Year 2 has (decreased or increased) slightly. Days’ sales in receivables has (decreased or increased). This is a (favorable or unfavorable) change. Apple’s inventory turnover in Year 2 has (decreased or increased) slightly. Days’ sales in inventory has (stayed the same or increased) . Apple’s return on sales in Year 2 has (decreased or increased). This a (favorable or unfavorable) change.
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