Financial Accounting - Access
4th Edition
ISBN: 9781259958533
Author: SPICELAND
Publisher: MCG
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Chapter 12, Problem 10RQ
To determine
To Explain: The effect of purchase of inventory on account on the
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Pro Leather, a supplier to sporting goods manufacturers, has a current ratio of 0.90, based on current assets of $450,000 and current liabilities of $500,000. How, if at all, will a $100,000 purchase of inventory on account affect the current ratio?
Dungy Training Company has a current ratio of 0.70 to 1, based on current assets of $3.43 million and current liabilities of $4.90 million. How, if at all, will a $900,000 cash purchase of inventory affect the current ratio? How, if at all, will a $900,000 purchase of inventory on account affect the current ratio?
If PetCo had net sales of $600,000, goods available for sale of $450,000, and cost of goods sold of $375,000, what is its grossmargin? What amount of inventory will be shown on its balance sheet?
Chapter 12 Solutions
Financial Accounting - Access
Ch. 12 - Prob. 1RQCh. 12 - Prob. 2RQCh. 12 - Prob. 3RQCh. 12 - Prob. 4RQCh. 12 - 5.In performing horizontal analysis, why is it...Ch. 12 - Prob. 6RQCh. 12 - Prob. 7RQCh. 12 - Prob. 8RQCh. 12 - Prob. 9RQCh. 12 - Prob. 10RQ
Ch. 12 - Prob. 11RQCh. 12 - Prob. 12RQCh. 12 - Prob. 13RQCh. 12 - Prob. 14RQCh. 12 - Prob. 15RQCh. 12 - Prob. 16RQCh. 12 - Prob. 17RQCh. 12 - Prob. 18RQCh. 12 - Prob. 19RQCh. 12 - Prob. 20RQCh. 12 - Prob. 12.1BECh. 12 - Prob. 12.2BECh. 12 - Prob. 12.3BECh. 12 - Prob. 12.4BECh. 12 - Prob. 12.5BECh. 12 - Universal Sports Supply began the year with an...Ch. 12 - Prob. 12.7BECh. 12 - Prob. 12.8BECh. 12 - Prob. 12.9BECh. 12 - Prob. 12.10BECh. 12 - Prob. 12.11BECh. 12 - Prob. 12.12BECh. 12 - Prob. 12.13BECh. 12 - Classify each of the following accounting...Ch. 12 - Classify each of the following accepted accounting...Ch. 12 - Prob. 12.1ECh. 12 - Prob. 12.2ECh. 12 - Prob. 12.3ECh. 12 - Prob. 12.4ECh. 12 - Prob. 12.5ECh. 12 - Refer to the information for Adrian Express in...Ch. 12 - Prob. 12.7ECh. 12 - Calculate profitability ratios (LO124) Refer to...Ch. 12 - Prob. 12.9ECh. 12 - The income statement for Stretch-Tape Corporation...Ch. 12 - Prob. 12.11ECh. 12 - LeBrons Bookstores has two divisions, books and...Ch. 12 - Prob. 12.13ECh. 12 - Prob. 12.14ECh. 12 - Distinguish between conservative and aggressive...Ch. 12 - Prob. 12.1APCh. 12 - Prob. 12.2APCh. 12 - Prob. 12.3APCh. 12 - Prob. 12.4APCh. 12 - Prob. 12.5APCh. 12 - Prob. 12.6APCh. 12 - Game-On Sports operates in two distinct segments:...Ch. 12 - Prob. 12.2BPCh. 12 - Prob. 12.3BPCh. 12 - Prob. 12.4BPCh. 12 - Prob. 12.5BPCh. 12 - Prob. 12.6BPCh. 12 - Prob. 12.1APCPCh. 12 - Prob. 12.2APFACh. 12 - Prob. 12.3APFACh. 12 - Prob. 12.4APCACh. 12 - Prob. 12.5APECh. 12 - Prob. 12.7APWCCh. 12 - Prob. 12.8APEM
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- Last year, Nikkola Company had net sales of 2,299,500,000 and cost of goods sold of 1,755,000,000. Nikkola had the following balances: Refer to the information for Nikkola Company above. Required: Note: Round answers to one decimal place. 1. Calculate the average inventory. 2. Calculate the inventory turnover ratio. 3. Calculate the inventory turnover in days. 4. CONCEPTUAL CONNECTION Based on these ratios, does Nikkola appear to be performing well or poorly?arrow_forwardTanke Company reported net income on the year-end financial statements of $850,200. However, errors in inventory were discovered after the reports were issued. If inventory was overstated by $21,000, how much net income did the company actually earn?arrow_forwardThe following information is available for Cooke Company for the current year: The gross margin is 40% of net sales. What is the cost of goods available for sale? a. 5840,000 b. 960,000 c. 1,200,000 d. 1,220,000arrow_forward
- SABM Co. reported net income of P2,100,000 for 2020 . It incurred operating expenses other than interest expense , at 40% of cost of sales but only 20% of sales. Interest expense is 5% of sales. Purchases is 120% of cost of sales and ending inventory is twice the beginning inventory. If the company is subject to 30% income tax, how much is the company's sales for the year? Data taken from the records of XYZ Co. revealed the following for 2020: Inventory - January 1 :P2,000,000; Net purchases : P7,000,000; Inventory - December 31 : P2,800,000; Sales Returns and allowances: P750,000. Gross profit based on net sales is 20%. How much is the gross sales for 2020?arrow_forwardThe cost of goods for sale of Ram Products Inc. was P7, 645,000 and the ending inventory amounts to P1, 314,300. What was the cost of goods sold?arrow_forwardHimantayon Company provided the following information for the current year: Beginning inventory P400,000, Freight in P300,000, Purchases returns P900,000, Ending Inventory P500,000, Selling expenses P1,250,000, Sales discount P250,000. The cost of goods sold is six times the selling expenses. What is the amount of gross purchases?arrow_forward
- For its most recent year a company had Sales (all on credit) of P830,000 and Cost of Goods Sold of P525,000. At the beginning of the year, its Accounts Receivable were P80,000 and its Inventory was P100,000. At the end of the year, its Accounts Receivable were P86,000 and its Inventory was P110,000. Answer the ff: without any explanations, just answer a. The inventory turnover ratio for the year was? b. The accounts receivable turnover for the year was? c. On average how many days of sales were in Accounts Receivable during the year? d. On average how many days of sales were in Inventory during the year?arrow_forwardBeach Wear has current liabilities of $350,000, a quick ratio of 1.65, an inventory turnover of 3.2, and a current ratio of 2.9. What is the cost of goods sold? A. $980,000 B. $1,060,000 C. $1,400,000 D. $1,500,000 E. $1,560,000arrow_forwardThe company made purchases of P60,000 and sales of P85,000 with P10,000 left in inventory. If the company has no beginning inventory, how much is the cost of sales?arrow_forward
- Harden Company had goods available for sale at cost amounting to $120,000 and at retail amounting to $200,000. The net sales for the current period amounted to $150,000. What is the estimated value of the ending inventory at cost using the retail method? Show your work.arrow_forwardRoselli's Machine Manufacturing Co reported its sales as R120 000, a gross profit of R50 000 and current liabilities of R25 000. If the current ratio is 2,5 and the quick ratio is 1,75, what is the inventory turnover for the company?arrow_forwardHamon Corporation has the following information before year-end, Total income for P130,000; total cost of goods sold for P62,000 and total operating expenses for P20,000. After closing the books, how much would be the ending balance of income summary?arrow_forward
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