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 $346,600 $330,460 $300,000 Accounts Receivable 65,000 65,000 60,000 Inventory 145,830 178,011 155,205 Equipment 100,465 101,202 103,085 Total Assets $657,895 $674,673 $618,290 Liabilities Salaries Payable $90,300 $88,563 $84,209 Accounts Payable 71,000 71,670 69,331 Notes Payable 41,000 50,650 58,250 Equity Common Stock 22,695 21,990 19,100 Retained Earnings 432,900 441,800 387,400 Total Liabilities and Equity $657,895 $674,673 $618,290 LEGUMES PLUS Comparative Balance Sheet December 31, 2017, 2018, and 2019 2019 2018 2017 Assets Cash $407,000 $389,450 $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 $535,556 $599,440 Liabilities Salaries Payable $95,200 $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 23,188 Retained Earnings 556,200 267,800 331,276 Total Liabilities and Equity $802,516 $535,556 $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 460,000 419,600 388,950 Gross Margin $540,000 $564,800 $486,400 Expenses 115,000 125,000 100,000 Net Income (Loss) $425,000 $439,800 $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

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 $346,600 $330,460 $300,000 Accounts Receivable 65,000 65,000 60,000 Inventory 145,830 178,011 155,205 Equipment 100,465 101,202 103,085 Total Assets $657,895 $674,673 $618,290 Liabilities Salaries Payable $90,300 $88,563 $84,209 Accounts Payable 71,000 71,670 69,331 Notes Payable 41,000 50,650 58,250 Equity Common Stock 22,695 21,990 19,100 Retained Earnings 432,900 441,800 387,400 Total Liabilities and Equity $657,895 $674,673 $618,290 LEGUMES PLUS Comparative Balance Sheet December 31, 2017, 2018, and 2019 2019 2018 2017 Assets Cash $407,000 $389,450 $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 $535,556 $599,440 Liabilities Salaries Payable $95,200 $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 23,188 Retained Earnings 556,200 267,800 331,276 Total Liabilities and Equity $802,516 $535,556 $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 460,000 419,600 388,950 Gross Margin $540,000 $564,800 $486,400 Expenses 115,000 125,000 100,000 Net Income (Loss) $425,000 $439,800 $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

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 7PA: Review the select information for Bean Superstore and Legumes Plus (industry competitors), and then...

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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	$346,600	$330,460	$300,000
Accounts Receivable	65,000	65,000	60,000
Inventory	145,830	178,011	155,205
Equipment	100,465	101,202	103,085
Total Assets	$657,895	$674,673	$618,290
Liabilities
Salaries Payable	$90,300	$88,563	$84,209
Accounts Payable	71,000	71,670	69,331
Notes Payable	41,000	50,650	58,250
Equity
Common Stock	22,695	21,990	19,100
Retained Earnings	432,900	441,800	387,400
Total Liabilities and Equity	$657,895	$674,673	$618,290

LEGUMES PLUS Comparative Balance Sheet December 31, 2017, 2018, and 2019
	2019	2018	2017
Assets
Cash	$407,000	$389,450	$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	$535,556	$599,440
Liabilities
Salaries Payable	$95,200	$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	23,188
Retained Earnings	556,200	267,800	331,276
Total Liabilities and Equity	$802,516	$535,556	$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	460,000	419,600	388,950
Gross Margin	$540,000	$564,800	$486,400
Expenses	115,000	125,000	100,000
Net Income (Loss)	$425,000	$439,800	$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.

Expert Solution

Step 1 Introduction

Income statement and balance sheet are the financial statements that are prepared at the end of the year to analyze the company's performance.

Ratio analysis can be done using the data from the financial statements which in turn helps to know about the solvency, liquidity and profitability performance of the company.

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