Question

Current Yr 1 Yr Ago 2 Yrs Ago At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity $ 34, 119 89,500 113,000 10,987 319,336 $566,942 $ 39,881 $ 40,321 6 2,800 50, 100 82,000 51,000 10,469 4,480 293,593 253, 399 $ 488,743 $ 399,300 $143,992 $ 84,250 $ 53,762 108,717 162,500 151,733 $566,942 114,659 9 0,010 162,500 162,500 127,334 93,028 $ 488,743 $ 399, 300 The company's income statements for the Current Year and 1 Year Ago, follow. Assume that all sales are on credit: For Year Ended December 31 Sales Cost of goods sold Other operating expenses Interest expense Income tax expense Total costs and expenses Net income Earnings per share Current Yr $ 737,025 $ 449,585 228, 478 12,529 9,581 700, 173 $ 36,852 1 Yr Ago $ 581,604 $ 378,043 147, 146 13,377 8,724 547,290 $ 34,314 $ 2.11 $ 2.27

Answer 1

2A
Accounts Receivable Turnover
	Choose Numerator:	/	Choose Denominator:	=	Accounts Receivable Turnover
	Net sales	/	Average accounts receivable, net	=	Accounts receivable turnover
Current Yr.	737025	/	76150	=	9.7	times
1 Yr Ago	581604	/	56450	=	10.3	times
	Workings:
	Average accounts receivable, net
	Current Yr.	76150	=(89500+62800)/2
	1 Yr Ago	56450	=(62800+50100)/2