The following selected accounts were taken from the financial records of Santa R
ID: 2489732 • Letter: T
Question
The following selected accounts were taken from the financial records of Santa Rosa Distributors at December 31, 2016. All accounts have normal balances.
Merchandise inventory at December 31, 2015 was $58,500. Based on the account balances above, calculate the following:
a. The gross profit percentage
b. Working capital
c. The current ratio
d. The inventory turnover
Cash $26,760 Accounts Receviable 47,700 Note receivable, due 2017 9,500 Merchandise inventory 35,700 Prepaid insurance 2,350 Supplies 1,410 Equipment 43,500 Accumulated depreciation, equipment 23,500 Note payable to bank, due 2017 35,000 Accounts payable 13,050 Interest payable 350 Sales 530,000 Sales Discounts 3,200 Cost of goods sold 348,540Explanation / Answer
Santa Rosa Distributors Details Amt $ Current Assets Cash $26,760 Accounts Receviable 47,700 Note receivable, due 2017 9,500 Merchandise inventory 35,700 Prepaid insurance 2,350 Supplies 1,410 Total Current Assets 123,420 Equipment 43,500 Accumulated depreciation, equipment 23,500 Current Liabilities Note payable to bank, due 2017 35,000 Accounts payable 13,050 Interest payable 350 Total Current Liabilities 48,400 a Santa Rosa Distributors Income statement for the period ending Dec 31.2016 Sales 530,000 Sales Discounts -3,200 Net Sales 526,800 Cost of goods sold 348,540 Gross Profit 178,260 Gross Profit %=178260/526800= 33.84% b Working capital calculation m Total Current Assets 123,420 n Total Current Liabilities 48,400 Working Capital=m-n= $ 75,020.00 c Current Ratio=Current Assets /Current Laibilities= 2.55 d Opeing inventory Jan 1 2016. 58,500 Closing inventory Dec 31.2016. 35,700 Average Inventory 2016= 47,100 Cost of Goods sold 2016 348,540 Inventory turnover =COGS/Avg Inventory= 7.40 times