Question

Excerpts from Candle Corporation's most recent balance sheet (in thousands of dollars) appear below:

	Year 2			Year 1
Current assets:
Cash	$	184		$	100
Accounts receivable, net		214			214
Inventory		164			154
Prepaid expenses		114			114
Total current assets	$	676		$	582
Current liabilities:
Accounts payable	$	224		$	204
Accrued liabilities		54			54
Notes payable, short term		114			104
Total current liabilities	$	392		$	362

Sales on account during the year totaled $1,320 thousand. Cost of goods sold was $920 thousand.

Required:

Compute the following for Year 2:

a. Working capital. (Enter your answer in thousands of dollars, i.e., 100,000 should be entered as 100.)

b. Current ratio. (Round your answer to 2 decimal places.)

c. Acid-test (quick) ratio. (Round your answer to 2 decimal places.)

d. Accounts receivable turnover. (Round your answer to 2 decimal places.)

e. Average collection period. (Use 365 days in a year. Round your intermediate calculations to 2 decimals places and your final answer to 1 decimal place.)

f. Inventory turnover. (Round your answer to 2 decimal places.)

g. Average sale period. (Use 365 days in a year. Round your intermediate calculations to 2 decimals places and your final answer to 1 decimal place.)

Answer 1

Toral Current Liabilities a) Working Capital - Toral Current L Assets - 676 - 392 * $ 284 b) Current Ratio a Toral Toral Current Current Assets liabilities 676000 392000 ) 11.727 29 Quick Ratio = curtomt Assets – toiventory Current liabilities t = 676000 – 164000 392000 1:31 d) Accounts Receivable , * Ner deles_ Turmover *Average_Aloum's sl Recinable 400 400 11.871 69 214 * Net zaled = Gross Sales - cost of goods wold _) 1320 - 920 0 3 $400 (im Holand)

Begimming AR + Emoding AR Average Account Receivable a la la la la 21 214 +214 2 * $ 214 e) Averege Collection Period 365 Accounts Receivable Tumover _365_ 1195.2 days 1.87 1 Anventory a Twimover cost of Goods hold Average Anventory 154, 4164 - - 5.79] 2 8 Average daled = Peild Days in year onventory Turmover + 3.99 163 days)