Question

ACCT-2120-00 x WileyPLUS X C Lendell Company Has These Coox + edugen.wileyplus.com/edugen/student/mainfr.uni LUS Weygandt, Managerial Accounting, 8e CALCULATOR MES RCES ment Exercise 14-9 Lendell Company has these comparative balance sheet data: Lendell Company Balance Sheets December 31 2020 2019 Cash $ 14,000 $ 29,000 Accounts receivable (net) 69,000 59,000 Inventory 59,000 49,000 Plant assets (net) 195,000 175,000 $337,000 $312,000 Accounts payable $50,000 $59,000 Mortgage payable (15%) 100,000 100,000 Common stock, $10 par 135,000 115,000 Retained earnings 52,000 38,000 $337,000 $312,000 ion) cudy Additional information for 2020: 1. Net Income was $24,000. 2. Sales on account were $403,000. Sales returns and allowances amounted to $19,000. 3. Cost of goods sold was $194,400. 4. Net cash provided by operating activities was $44,000. 5. Capital expenditures were $27,000, and cash dividends were $8.500. Compute the following ratios at December 31, 2020. (Round current ratio to 2 decimal places re to search

Answer 1

a) Solution Current ratio = Current assets / Current Halilibres Cuorest Assets = cash + Accounts receivable + Inventory = 14000 + 69000 + 59000 = 142000 Current liabilities - Accounts payable = 50000 Currunt ratio = 142000 50000 = .84 times b) Accounts receivable turnover - Credit Sales / Average accounts yucelvable = [C403000 – 19000)/(69000+59000)/2) = 384000 / 64000 = 6 Temer Average collection period = 365/ Accounts receivable Turnover ratto = 36516 = 60.833 C

1. d) Inventory turnover is = cost of goods sold / Average Inventory = 194400/C54000 +49000)/2] = 194400 54000 = 3.6 Times e) ays in Inventory = 365 / Inventory Tornover ratio = 365 36 = 101.39 Days f) free cash How = 44000 - 27000 78500 - 8500