Horngren's Accounting (12th Edition)
12th Edition
ISBN: 9780134486444
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 17, Problem S17.7SE
Computing inventory, gross profit, and receivables ratios
Learning Objective 4
Requirements
- Compute the inventory turnover, days' sales in inventory, and gross profit percentage for Accel's Companies for 2018.
- Compute days' sales in receivables during 2018. Round intermediate calculations to three decimal places. Assume all sales were on account.
- What do these ratios say about Accel's Companies' ability to sell inventory and collect receivables?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
years ended June 30, 2019 and 2018:
Cost of Goods Available for Sale
Nature Foods Grocery reported the following comparative income statements for the
Beginning Merchandise Inventory
Less: Ending Merchandise Inventory
During 2019, Nature Foods Grocery discovered that ending 2018 merchandise inven-
inventory error-two years
an
Merchandise Inventory 361
Learning Objective 5
1.2019, NI $36,500
NATURE FOODS GROCERY
Income Statements
Years Ended June 30, 2019 and 2018
2019
Net Sales Revenue
Cost of Goods Sold:
2018
$ 134,000
$ 119,000
$ 17,000
78,000
$ 14,000
67,000
81,000
Net Cost of Purchases
95,000
18,000
17,000
Cost of Goods Sold
77,000
64,000
57,000
Gross Profit
55,000
Operating Expenses
26,000
21,000
$ 31,000
Net Income
$ 34,000
tory was overstated by $5,500.
Requirements
1. Prepare corrected income statements for the two years.
2.
2 State whether each year's net income-before your corrections-is understated or
overstated, and indicate the amount of the understatement or…
Click to watch the Tell Me More Learning Objective 7 video and then answer the questions below.
1. The total units to be produced in a period is calculated as
a. estimated units sold plus desired ending inventory less estimated beginning inventory
b. estimated units sold less desired ending inventory add estimated beginning inventory
c. estimated units sold plus desired ending inventory plus estimated beginning inventory
d. estimated units sold less desired ending inventory less estimated beginning inventory
b
2. Cost of goods sold is calculated as
a. beginning finished goods inventory plus cost of goods manufactured less beginning finished goods inventory
b. beginning finished goods inventory plus cost of goods manufactured plus beginning finished goods inventory
c. beginning finished goods inventory less cost of goods manufactured less beginning finished goods inventory
d. beginning finished goods inventory less cost of goods manufactured plus beginning finished goods inventory
d…
E6A-27 Computim
Learning Objective 7
Appendix 6A
ventory
Consider the data of the following companies which use the PEHOUI
system:
Beginning
Merchandise
Inventory
Ending
Merchandise
Inventory
Cost of
Goods Sold
Net Cost of
Net Sales
Gross Profit
Purchases
Company
Revenue
$ 105,000
$ 23,000
$ 59,000
$ 22,000
24
(a)
$ 45,000
Large
Small
(b)
27,000
94,000
(c)
99,000
40,000
Medium
96,000
(d)
58,000
24,000
68,000
(e)
Petite
80,000
8,000
(f)
6,500
(g)
44,000
Requirements
1. Supply the missing amounts in the preceding table.
2. Prepare the income statement for the year ended December 31, 2019, for Large
Company, which uses the periodic inventory system. Include a complete headıng
and show the full computation of cost of goods sold. Large's operating expenses
for the year were $12,000.
Chapter 17 Solutions
Horngren's Accounting (12th Edition)
Ch. 17 - Prob. 1QCCh. 17 - Prob. 2QCCh. 17 - Prob. 3QCCh. 17 - Prob. 4QCCh. 17 - Prob. 5QCCh. 17 - Prob. 6QCCh. 17 - Prob. 7QCCh. 17 - Prob. 8QCCh. 17 - Prob. 9QCCh. 17 - Prob. 10QC
Ch. 17 - Prob. 1RQCh. 17 - Prob. 2RQCh. 17 - Prob. 3RQCh. 17 - Prob. 4RQCh. 17 - Prob. 5RQCh. 17 - Prob. 6RQCh. 17 - What is benchmarking, and what are the two main...Ch. 17 - Prob. 8RQCh. 17 - Prob. 9RQCh. 17 - Prob. 10RQCh. 17 - Prob. 11RQCh. 17 - Prob. 12RQCh. 17 - Prob. 13RQCh. 17 - Prob. S17.1SECh. 17 - Prob. S17.2SECh. 17 - Prob. S17.3SECh. 17 - Prob. S17.4SECh. 17 - Prob. S17.5SECh. 17 - Prob. S17.6SECh. 17 - Computing inventory, gross profit, and receivables...Ch. 17 - Prob. S17.8SECh. 17 - Measuring profitability Learning Objective 4...Ch. 17 - Prob. S17.10SECh. 17 - Prob. S17.11SECh. 17 - Prob. S17.12SECh. 17 - Prob. E17.13ECh. 17 - Prob. E17.14ECh. 17 - Prob. E17.15ECh. 17 - Prob. E17.16ECh. 17 - Prob. E17.17ECh. 17 - Prob. E17.18ECh. 17 - Prob. E17.19ECh. 17 - Prob. E17.20ECh. 17 - Prob. E17.21ECh. 17 - Prob. E17.22ECh. 17 - Prob. P17.23APGACh. 17 - Prob. P17.24APGACh. 17 - Prob. P17.25APGACh. 17 - Prob. P17.26APGACh. 17 - Using ratios to evaluate a stock investment...Ch. 17 - Prob. P17.28APGACh. 17 - Prob. P17.29APGACh. 17 - Prob. P17.30BPGBCh. 17 - Prob. P17.31BPGBCh. 17 - Prob. P17.32BPGBCh. 17 - Prob. P17.33BPGBCh. 17 - Prob. P17.34BPGBCh. 17 - Prob. P17.35BPGBCh. 17 - Completing a comprehensive financial statement...Ch. 17 - Prob. P17.37CTCh. 17 - Prob. P17.38CPCh. 17 - Prob. 17.1DCCh. 17 - Prob. 17.1EICh. 17 - Financial Statement Case 17-1 Use Target...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Using a perpetual inventory system, how should a company record the sale of inventory costing $400 for $1,110 on account? Event 1. 2. Account Title Inventory Cost of Goods Sold Sales Revenue Accounts Receivable Accounts Receivable. Sales Revenue Cost of Goods Sold Inventory 3. Inventory Gain Sales Revenue 4. Accounts Receivable Sales Revenues Gain Debit 400 1,110 1,110 400 400 710 1,110 Credit 400 1,110 1,110 400 1,110 400 710arrow_forwardLearning Objective 2: Compare ending inventory and cost of goods sold—FIFOvs. LIFO) Paulson’s specializes in sound equipment. Company records indicate the followingdata for a line of speakers:Unit Cost$4964JunDate12713ItemBalance...................Purchase.................Sale ........................Sale ........................Quantity18376Sale Price$115103Requirements1. Determine the amounts that Paulson’s should report for cost of goods sold and endinginventory two ways:a. FIFOb. LIFO2. Paulson’s uses the FIFO method. Prepare the company’s income statement for the monthended June 30, 2018, reporting gross profit. Operating expenses totaled $340, and theincome tax rate was 35%.arrow_forwardchapter 6 > Short Exercises For all short exercises, assume the perpetual inventory system is used unless stated otherwise. Learning Objective 1 S6-1 Determining inventory accounting principles Ward Hardware used the FIFO inventory costing method in 2018. Ward plans to continue using the FIFO method in future years. Which accounting principle is most relevant to Ward's decision?arrow_forward
- Formative Assessment FA10: Required: Prepare Income Statement. Reflect in the income statement the net sales, net purchases, merchandise available for sale, cost of goods sold, gross profit, total operating expenses and net income. Below are the balances of income statement accounts of Gwaping's Store as of Dec. 31, 2017. Amounts Inventory, Dec. 31, 2017 486,945 Inventory, Jan. 01, 2017 395,870 Bad Debts Expense Depreciation Expense Freight - in 11,233 24,301 45,689 Freight Out Miscellaneous Expense Purchase Disco unts Purchase Returns 39,978 6,492 14,377 3,445 Purchases 945,788 46,800 185,972 Rent Expense Salaries Expense Sales 1,329,743 Sales Discounts 48,544 Sales Returns 52,301 Supplies Expense Utilities Expense 8,978 26,979arrow_forwardPlease provide the following: • quick ratio • inventory turnover • account receivable Important note: please follow the formula on the lesson attached (photo)arrow_forward5- Inventory Cost Flow Assumptions LEARNING OBJECTIVE: Differentiate between the key characteristics of the four inventory valuation methods. Which of the following descriptions corresponds with the weighted average inventory valuation method? a.) Matches cost of items purchased against cost of items in inventory b.) Disregards when inventory was purchased c.) Inventory purchased first has a greater weight than inventory purchased later d.) Tends to be used for inventories of large, unique items SUBMIT MY ANSWERarrow_forward
- Computing cost of goods sold in a periodic inventory system Clink Electric uses the periodic inventory system. Clink reported the following selected amounts at May 31, 2018: Compute the following for Clink: a. Cost of goods sold. b. Gross profit.arrow_forwardSales revenue Purchases Net income as a percent of sales revenue Beginning inventory Expenses including income taxes Tax rate a. Required a. Prepare the company's single-step income statement. b. Prepare the journal entry at period-end to eliminate beginning inventory and to record ending inventory. Note: Do not use negative signs with your answers. Income Statement Sales revenue Cost of goods sold: Beginning inventory Plus: Purchases Cost of goods available for sale Less: Ending inventory Cost of goods sold Gross margin Expenses Income before taxes Income taxes Net income $ $ $440,000 $308,000 $ 15% $55,000 $99,000 25% 440,000 55,000 308,000 X 0 x 0 x 0 x x 0 x 0 x 0 xarrow_forward1) Using a perpetual inventory system, how should a company record the sale of inventory costing $620 for $960 on account? 1. Inventory. 620 Cost of goods sold. 620 Sales revenue. 960 Accounts receivable. 960 2. Accounts receivable. 960 Sales revenue. 960 Cost of goods sold. 620 Inventory. 620 3. Inventory. 620 Gain. 340 Sales revenue. 960 4. Accounts Receivable. 960 Sales revenue. 620 Gain. 340arrow_forward
- Consider the following financial statement information: Item Beginning Year Ending Inventory € 9.780 € 11.380 € 4.108 € 4.938 € 7.636 € 7.927 Accounts Receivable Accounts Payable Credit Sales Cost of Goods Sold € 89.804 € 56.384 Calculate the operating and cash cycles. How do you interpret your answer?arrow_forwardThis problem challenges you to apply your cumulative accounting knowledge to move a step beyond the material in the chapter. Days cash is outstanding for merchandise: 54.04 days Combining the information provided by various ratios can enhance your understanding of the financial condition of a business. Review the information provided for Na Pali Coast Company in the Mastery Problem. Using this information, respond to the following questions: REQUIRED 1. Compute the average number of days required to sell inventory and collect cash from customers buying on account. 2. Note that Na Pali Coast Company also buys inventory on account. On average, how many days pass before Na Pali pays its creditors? 3. Using the information from your answers to parts (1) and (2), compute the number of days from the time Na Pali Coast pays for inventory until it receives cash from customers on account.arrow_forwardUse a spreadsheet and the following excerpts from Hileah Companys financial information to build a template that automatically calculates (A) inventory turnover and (B) number of days sales in inventory, for the year 2018.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
College Accounting, Chapters 1-27 (New in Account...AccountingISBN:9781305666160Author:James A. Heintz, Robert W. ParryPublisher:Cengage Learning
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
College Accounting, Chapters 1-27 (New in Account...
Accounting
ISBN:9781305666160
Author:James A. Heintz, Robert W. Parry
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Chapter 6 Merchandise Inventory; Author: Vicki Stewart;https://www.youtube.com/watch?v=DnrcQLD2yKU;License: Standard YouTube License, CC-BY
Accounting for Merchandising Operations Recording Purchases of Merchandise; Author: Socrat Ghadban;https://www.youtube.com/watch?v=iQp5UoYpG20;License: Standard Youtube License