Review the select information for Bean Superstore and Legumes Plus (industry competitors), and then complete the following. BEAN SUPERSTORE Comparative Balance Sheet December 31, 2017, 2018, and 2019 2019 2018 2017 Assets Cash $345,600 $330,460 $300,000 Accounts Receivable 65,000 60,000 60,000 Inventory 150,830 178,011 155,205 Equipment 100,465 101,202 103,085 Total Assets $661,895 $669,673 $618,290 Liabilities Salaries Payable $90,200 $88,563 $84,209 Accounts Payable 70,000 71,670 69,331 Notes Payable 42,000 50,650 58,250 Equity Common Stock 22,695 20,990 19,200 Retained Earnings 437,000 437,800 387,300 Total Liabilities and Equity $661,895 $669,673 $618,290
Review the select information for Bean Superstore and Legumes Plus (industry competitors), and then complete the following. BEAN SUPERSTORE Comparative Balance Sheet December 31, 2017, 2018, and 2019 2019 2018 2017 Assets Cash $345,600 $330,460 $300,000 Accounts Receivable 65,000 60,000 60,000 Inventory 150,830 178,011 155,205 Equipment 100,465 101,202 103,085 Total Assets $661,895 $669,673 $618,290 Liabilities Salaries Payable $90,200 $88,563 $84,209 Accounts Payable 70,000 71,670 69,331 Notes Payable 42,000 50,650 58,250 Equity Common Stock 22,695 20,990 19,200 Retained Earnings 437,000 437,800 387,300 Total Liabilities and Equity $661,895 $669,673 $618,290
Chapter9: Accounting For Receivables
Section: Chapter Questions
Problem 8PA: The following select financial statement information from Candid Photography. Compute the accounts...
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Review the select information for Bean Superstore and Legumes Plus (industry competitors), and then complete the following.
BEAN SUPERSTORE Comparative Balance Sheet December 31, 2017, 2018, and 2019 |
|||
2019 | 2018 | 2017 | |
Assets | |||
Cash | $345,600 | $330,460 | $300,000 |
Accounts Receivable | 65,000 | 60,000 | 60,000 |
Inventory | 150,830 | 178,011 | 155,205 |
Equipment | 100,465 | 101,202 | 103,085 |
Total Assets | $661,895 | $669,673 | $618,290 |
Liabilities | |||
Salaries Payable | $90,200 | $88,563 | $84,209 |
Accounts Payable | 70,000 | 71,670 | 69,331 |
Notes Payable | 42,000 | 50,650 | 58,250 |
Equity | |||
Common Stock | 22,695 | 20,990 | 19,200 |
437,000 | 437,800 | 387,300 | |
Total Liabilities and Equity | $661,895 | $669,673 | $618,290 |
LEGUMES PLUS Comparative Balance Sheet December 31, 2017, 2018, and 2019 |
|||
2019 | 2018 | 2017 | |
Assets | |||
Cash | $407,000 | $388,450 | $356,367 |
Accounts Receivable | 85,430 | 82,670 | 79,230 |
Inventory | 128,080 | 40,036 | 52,142 |
Equipment | 182,006 | 23,400 | 111,701 |
Total Assets | $802,516 | $534,556 | $599,440 |
Liabilities | |||
Salaries Payable | $95,100 | $91,455 | $89,467 |
Accounts Payable | 62,430 | 86,331 | 87,197 |
Notes Payable | 63,222 | 67,880 | 68,312 |
Equity | |||
Common Stock | 25,464 | 22,090 | 22,688 |
Retained Earnings | 556,300 | 266,800 | 331,776 |
Total Liabilities and Equity | $802,516 | $534,556 | $599,440 |
BEAN SUPERSTORE Comparative Income Statement Year Ended December 31, 2017, 2018, and 2019 |
|||
2019 | 2018 | 2017 | |
Net Credit Sales | $1,000,000 | $984,400 | $875,350 |
COGS | 450,000 | 419,600 | 388,950 |
Gross Margin | $550,000 | $564,800 | $486,400 |
Expenses | 115,000 | 126,000 | 100,000 |
Net Income (Loss) | $435,000 | $438,800 | $386,400 |
LEGUMES PLUS Comparative Income Statement Year Ended December 31, 2017, 2018, and 2019 |
|||
2019 | 2018 | 2017 | |
Net Credit Sales | $1,256,300 | $1,020,570 | $967,478 |
COGS | 500,000 | 580,320 | 465,780 |
Gross Margin | $756,300 | $440,250 | $501,698 |
Expenses | 200,000 | 174,450 | 169,422 |
Net Income (Loss) | $556,300 | $265,800 | $332,276 |
A. Compute the accounts receivable turnover ratios for each company for 2018 and 2019. Round your answers to two decimal places.
Bean Superstore | Legume Plus | |
ART 2018 | fill in the blank 1 times | fill in the blank 2 times |
ART 2019 | fill in the blank 3 times | fill in the blank 4 times |
B. Compute the number of days’ sales in receivables ratios for each company for 2018 and 2019. Assume 365 days a year. Round your answers to two decimal places.
Bean Superstore | Legume Plus | |
Days' Sales 2018 | fill in the blank 5 days | fill in the blank 6 days |
Days' Sales 2019 | fill in the blank 7 days | fill in the blank 8 days |
C. Which company is the better investment and why?
a. | Legume could be the better investment because the 2019 turnover rate is close to Bean, but the trend is upward, while Bean is downward. |
b. | If one considers other factors such as net income, Legume shows a big jump in 2019 for net income, and greater cash on hand and receivables than Bean. |
c. | Bean could be considered the better investment because its net income, while lower than Legume’s in 2019, is much less volatile and therefore less risky. |
d. | All of the above statements may be correct. |
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