ACCT 301 ACCT301 Week 3 Problem 1 and Problem 2 (Ratios Analysis)

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Problem 1     
      
Required:Express each income statement component as a percentage of sales, and comment on the trends in each line from 2012 to 2013. 
 
 
      
      
 2013% Sales2012% SalesComments
Sales$ 1,000,000 $ 1,200,000  
Cost of goods sold$ 450,000 $ 600,000  
Gross margin$ 550,000 $ 600,000  
Operating expenses$ 600,000 $ 450,000  
Net income$(50,000) $ 150,000  

 

Problem 2   
     
Required:Compute (1) accounts receivable turnover for 2013, (2) the inventory turnover for 2013, and (3) the net margin for 2012.
    
     
Balance sheet items2013 2012  
 Accounts receivable$ 380,000.00$ 376,000.00 
 Allowance for doubtful accounts$ (20,000.00)$ (16,000.00) 
 Net accounts receivable$ 360,000.00$ 360,000.00 
     
 Inventory$ 480,000.00$ 440,000.00 
     
Income statement items   
 Sales$ 3,400,000.00$ 3,080,000.00 
     
 Cost of goods sold$ 1,600,000.00$ 1,440,000.00 
     
 Operating expenses$ 780,000.00$ 680,000.00
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