1. Consider the following financial statement information for the Hop Corporation: |
Item | Beginning | Ending | |||||||
Inventory | $ | 10,800 | $ | 11,800 | |||||
Accounts receivable | 5,800 | 6,100 | |||||||
Accounts payable | 8,000 | 8,400 | |||||||
Net sales | $ | 88,000 | |||||||
Cost of goods sold | 68,000 | ||||||||
Calculate the operating cycle Calcuate the cash cycle |
2.
Here are the most recent balance sheets for Country Kettles, Inc. Excluding accumulated depreciation, determine whether each item is a source or a use of cash, and the amount. |
COUNTRY KETTLES, INC. Balance Sheet |
||||||||
2018 | 2019 | |||||||
Assets | ||||||||
Cash | $ | 30,900 | $ | 30,040 | ||||
Accounts receivable | 70,400 | 73,480 | ||||||
Inventories | 61,300 | 63,500 | ||||||
Property, plant, and equipment | 152,000 | 161,800 | ||||||
Less: Accumulated depreciation | (46,320 | ) | (50,400 | ) | ||||
Total assets | $ | 268,280 | $ | 278,420 | ||||
Liabilities and Equity | ||||||||
Accounts payable | $ | 45,400 | $ | 47,540 | ||||
Accrued expenses | 6,780 | 6,020 | ||||||
Long-term debt | 26,100 | 28,750 | ||||||
Common stock | 21,000 | 25,500 | ||||||
Accumulated retained earnings | 169,000 | 170,610 | ||||||
Total liabilities and equity | $ | 268,280 | $ | 278,420 | ||||
Item Source/Use Amount
Cash
Accounts receivable
Inventories
Property, plant, and equipment
Accounts payable
Accrued expenses
Long-term debt
Common stock
Accumulated retained earnings
Answer to Question 1:
Average Inventory = ($10,800 + $11,800) / 2
Average Inventory = $11,300
Average Accounts Receivable = ($5,800 + $6,100) / 2
Average Accounts Receivable = $5,950
Average Accounts Payable = ($8,000 + $8,400) / 2
Average Accounts Payable = $8,200
Accounts Receivable Period = 365 * Average Accounts Receivable /
Net Sales
Accounts Receivable Period = 365 * $5,950 / $88,000
Accounts Receivable Period = 24.68 days
Accounts Payable Period = 365 * Average Accounts Payable / Cost
of Goods Sold
Accounts Payable Period = 365 * $8,200 / $68,000
Accounts Payable Period = 44.01 days
Inventory Period = 365 * Average Inventory / Cost of Goods
Sold
Inventory Period = 365 * $11,300 / $68,000
Inventory Period = 60.65 days
Operating Cycle = Accounts Receivable Period + Inventory
Period
Operating Cycle = 24.68 days + 60.65 days
Operating Cycle = 85.33 days
Cash Cycle = Operating Cycle - Accounts Payable Period
Cash Cycle = 85.33 days - 44.01 days
Cash Cycle = 41.31 days
1. Consider the following financial statement information for the Hop Corporation: Item Beginning Ending Inventory $...
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