Please show work. Thank you Natcher Corporation\'s accounts receivable at the en
ID: 2475427 • Letter: P
Question
Please show work. Thank you
Natcher Corporation's accounts receivable at the end of Year 2 was $155,000 and its accounts receivable at the end of Year 1 was $161,000. The company's inventory at the end of Year 2 was $156,000 and its inventory at the end of Year 1 was $149,000. Sales, all on account, amounted to $1,411,000 in Year 2. Cost of goods sold amounted to $828,000 in Year 2. The company's operating cycle for Year 2 is closest to:(Assume 365 days a year. Do not round your intermediate answers.)
Natcher Corporation's accounts receivable at the end of Year 2 was $155,000 and its accounts receivable at the end of Year 1 was $161,000. The company's inventory at the end of Year 2 was $156,000 and its inventory at the end of Year 1 was $149,000. Sales, all on account, amounted to $1,411,000 in Year 2. Cost of goods sold amounted to $828,000 in Year 2. The company's operating cycle for Year 2 is closest to:(Assume 365 days a year. Do not round your intermediate answers.)
Explanation / Answer
**Average inventory = (156000 + 149000) /2
= 305000/2
= 152500
**Average receivable = (155000 + 161000) /2
= 158000
operating cycle = [Days sales of inventories] + [Days sales outstanding]
= [365 *Average inventory /COGS ] + [365*Average receivable / Sales]
= [365* 152500 / 828000] + [365* 158000 / 1411000]
= 67.23 + 40.87
= 108.10 days