Question

Accounting help
Zebra Company reports the following figures for the years ending December 31, 2019 and 2018: Net Sales Cost of Goods Sold Gross Profit 2019 $68,000 43,000 $25,000 2018 $50,000 31,000 $19,000 What are the percentage changes from 2018 to 2019 for Net Sales, Cost of Goods Sold and Gross Profit, respectively? (Round your final answers to one decimal place, X.X%) O A. 100%, 0.7%, 0.8% O B. 36%, 38.7%, 31.6% O C. 31.6%, 36%, 38.7% OD. 100%, 31.6%, 38.7%

Answer 1

1.  

B - 36%,38.7%, 31.6%

Increase in Net Sales = [(Net Sales in 2019 - Net Sales in 2018) / Net Sales in 2018 ] * 100

                                         = [($68,000 - $50,000) / $50,000] * 100

                                         = ($18,000 / $50,000) * 100

                                          = 0.36 or 36%

Increase in Cost of goods Sold (COGS) = [(COGS in 2019 - COGS in 2018) / COGS in 2018 ] * 100

                                                                         = [($43,000 - $31,000) / $31,000] * 100

                                                                         = ($12,000 / $31,000) * 100

                                                                         = 0.387 or 38.7%

Increase in Gross Profit = [(Gross Profit in 2019 - Gross Profit in 2018) / Gross Profit in 2018 ] * 100

                                            = [($25,000 - $19,000) / $19,000 ] * 100

                                            = ($6,000 / $19,000) * 100

                                            = 0.3157 or 31.6%

2.

A - 88 days

Average Collection period of receivables = 365 days / Accounts receivable turnover ratio

Accounts receivable turnover ratio = Net Credit Sales / Average accounts receivable)

Average accounts receivable = (Opening Average accounts receivable + Closing Average accounts receivable) / 2

                                                     = ($410,000 + $550,000) / 2

                                                     = $480,000

Net Credit Sales for the year are $2,000,000

Accounts receivable turnover ratio = Net Credit Sales / Average accounts receivable

                                                              = $2,000,000 / $480,000

                                                              = 4.17 %

Average Collection period of receivables = 365 days / Accounts receivable turnover ratio

                                                                           = 365 days / 4.17%

                                                                           = 88 days

3.

D - 445 days

Days Inventory Outstanding = (Average Inventory / Cost of goods Sold) * 365 days

Average Inventory = (Opening Inventory + Closing Inventory) / 2

                                 = ($10 million + $12 million ) / 2

                                 = $11 million

Cost of goods sold = $9 million

Days Inventory Outstanding = (Average Inventory / Cost of goods Sold) * 365 days

                                                   = ($11 million / $9 million ) * 365 days

                                                   = 445 days