Answer to Question 1:
Requirement 1.
Quick Ratio = Quick Assets / Current Liabilities
Quick Assets = Cash + Marketable Securities + Accounts
Receivable, Net + Other Current Assets
Quick Assets = $12,000 + $23,000 + $55,000 + $2,000
Quick Assets = $92,000
Current Liabilities = Accounts Payable + Other Current
Liabilities
Current Liabilities = $18,000 + $105,000
Current Liabilities = $123,000
Quick Ratio = $92,000 / $123,000
Quick Ratio = 0.75
Quick Ratio is weak, as a Company should have sufficient Quick assets to meet its current liabilities.
Days’ Sales Outstanding = 365 * Average Accounts Receivable / Net Sales
Average Accounts Receivable = ($55,000 + $69,000) / 2
Average Accounts Receivable = $62,000
Days’ Sales Outstanding = 365 * $62,000 / $868,000
Days’ Sales Outstanding = 26.07 days
Days’ sales outstanding is strong, as it collecting its sales in less than its credit period.
Requirement 2.
The two ways to speed up cash flow from receivable are:
Swenson Corporation reported the following items at December 31, 2018, and 2017: (Click the icon to...
Chippewa Corporation reported the following items at December 31, 2018, and 2017 Requirement 1. Compute the company's (a) quick (acid-test) ratio and (b) days' sales outstanding for 2018. Evaluate each ratio value as strong or weak. All sales are on account with terms of net 30 days. (a) Enter the formula and calculate the quick (acid-test) ratio for 2018.
Swenson's selling and administrative expenses include the following: (Click the icon to view the expenses.) Swenson, Inc., sells tire rims. Its sales budget and inventory, purchases, and cost of goods sold budget for the nine months ended September 30, 2018, follow: (Click the icon to view the sales budget and inventory, purchases, and cost of goods sold budget.) Prepare a selling and administrative expense budget for each of the three quarters of 2018 and totals for the nine-month period. Swenson,...
Bold Interiors reported the following transactions in December: (Click on the icon to view the transactions.) Read the requirements. Requirement 1. Record the foregoing transactions in the journal of Bold Interiors using the gross method. (You do not need to make the cost of sales journal entries, assume that these entries will be made by the company when it makes its other adjusting entries at period end.) (Record debits first, then credits. Exclude explanations from any journal entries.) Dec 2:...
Mansfield Office Furniture Store reported the following selected items at December 31, 2019 (previous year - 2018 - amounts are also given as needed): $ 50,000 75,000 63,000 55,000 375,000 Cash Accounts Receivable, net: Dec. 31, 2019 Dec. 31, 2018 Accounts Payable Cost of Goods Sold Merchandise Inventory Dec 31, 2019 Dec 31, 2018 Net Credit Sales Revenue Long-Term Assets Long-Term Liabilities Other Current Assets Other Current Liabilities Short-term Investments 240,000 220,000 820,000 320,000 240,000 135,000 125,000 80,000 Compute Mansfield's...
S5-12 (similar to) Western Products reported the following amounts in its 2019 financial statements. The 2018 amounts are given for comparison. (Click the icon to view the financial data.) Read the requirements. Requirement 1. Compute Western's quick (acid-test) ratio at the end of 2019. Round to two decimal places. How does the quick ratio compare with the industry average of 0.92? Begin by selecting the formula, then enter the amounts and compute the quick (acid-test) ratio. (Abbreviation used: Cash* =...
Cabbage White Map Company's balance sheet at December 31, 2017, reported the following (Click the icon to view the data) Read the requirements Requirement 1. How much of the receivables did Cabbage White expect to collect Stated differently, what was the net realizabie value of these receivable? The net realizable value of these receivables is SL Requirement 2. Joumalize, without explanations, 2018 entries for Cabbage White and post to the Accounts Receivable and Allowance for Bad Debts T-accounts Begin with...
Comanche Carpets reported the following amounts in its 2018 financial statements. The 2017 figures are given for comparison (Click the icon to view the comparative financial information.) Read the requirements Requirement 1. Calculate Comanche's acid-test ratio for 2018. (Round to two decimals.) Determine whether Comanche's acid-test ratio improved or deteriorated from 2017 to 2018. How does Comanche's acid-test ratio compare with the industry average of 0.80? (Abbreviations used: Cash Cash including cash equivalents: ST invest short-term investments. Round the acid...
Bassani, Inc. has the following balance sheet at December 31, 2018 EEB (Click the icon to view the balance sheet.) Bassani projects the following transactions for 2019 (Click the icon to view the transactions.) Prepare a budgeted balance sheet for Bassani, Inc. for December 31, 2019. (Hint: It may be helpful to trace the effects of each transaction on the accounting equation to determine the ending balance of each account.) Begin by completing the accounting equation for the 2019 transactions....
Southern Products reported the following amounts in its 2019 financial statements. The 2018 amounts are given for comparison. 2019 2018 Current assets: Cash $10,000 $10,000 Short-term investments 10,000 6,500 Accounts receivable $85,000 $75,100 Less: Allowance for uncollectibles (6,000) 79,000 (4,000) 71,100 Inventory 193,000 194,000 Prepaid insurance 2,000 2,000 Total current assets 294,000 283,600 Total current liabilities 100,000 107,000 Net sales (all on account) 1,050,700 735,000 Requirement 1. Compute Southern's quick (acid-test) ratio at the end of 2019. Round to two...
Pilgrim Products reported the following amounts in its 2019 financial statements. The 2018 amounts are given for comparison Click the loon to view the financial data) Read the requirements Requirement 1. Compute Plgrim's quick acid-test)ratis at the end of 2010. Round to two decimal places. How does the quick ratio compare with the industry average of 0.027 Begin by selecting the formula, then enter the amounts and compute the quick (ack-400) roto (Abbreviation used: Cash Cash and cash equivalents. Round...