Question

Selected data from Franklin Company follow: Balance Sheets As of December 31 2018 2017 Accounts receivable Allowance for doubtful accounts Net accounts receivable Inventories, lower of cost or market $404,000 $379,000 (20,200)(15,160) $383,800 $363,840 $476,000 $435,000 Income Statement For the Years Ended December 31 2018 2017 Net credit sales Net cash sales Net sales $2,007,000 $1,752,000 415,000 309,00 Cost of goods sold Selling, general, and administrative expenses Other expenses 2,422,000 1,606,000 2,061,000 1,432,000 214,600 239,900 40,80022,500 Total operating expenses $1,886,700 $1,669,100

Answer 1

Answers

• All working forms part of the answer
• Requirement ‘a’

	Accounts receivables, net:
A	2017	$          363,840.00
B	2018	$          383,800.00
C = A+B	Total	$          747,640.00
D = C/2	Average Accounts receivables	$          373,820.00
E	Net Credit Sale 2018	$      2,007,000.00
F = E/D	Accounts receivables Turnover ratio	5.37 times = answer

• Requirement ‘b’

	Inventories balance:
A	2017	$          435,000.00
B	2018	$          476,000.00
C = A+B	Total	$          911,000.00
D = C/2	Average Inventories	$          455,500.00
E	Cost of Goods Sold for 2018	$      1,606,000.00
F = E/D	Inventory Turnover Ratio	3.53 times = answer

• Requirement ‘c’

Working		2017
A	Total Net Sales	$      2,061,000.00
B	Total Operating Expenses	$      1,669,100.00
C = A/B	Net Income	$          391,900.00
D = (C/A) x 100	Net Margin for 2017	19.02%