Question

The Income Statement and Balance Sheet columns below are from the worksheet of Bleeker Street Bounty year ended December 31, 20--.

Using the worksheet, compute (a) total current assets, (b) working capital, (c) current ration, and (d) accounts receivable turnover. (Accounts receivable balance on Jan. 1, 20-- was $23,200.) Round to 2 decimal places. All sales are on account.

Bleeker Street Bounty Work Sheet (partial) For the year ended December 31, 20- Income Statement Balance Sheet Account Title Debit Credit Debit Credit Cash 12,300 Accounts Receivable 25,000 Merchandise Inventory 16,000 Store Supplies 1,100 Office Supplies 600 Prepaid Insurance 1,500 Store Equipment 66,000 Accumulated Depreciation Store Equipment 38,000 Office Equipment 18,000 Accumulated Depreciation Office Equipment 10,000 Accounts Payable 22,300 Saiaries Payable 400 Long-Term Notes Payable 36,000 Carlo Perez, Capital 50,600 Carlo Perez, Drawing 32,000 Income Summary 17,000 16,000 Sales 61,500 Sales Returns and Allowances 500 Purchases 23.000 Purchases Returns and Allowances 700 Purchases Discounts 400 Sales Salary Expense (selling) 9,200 Office Salary Expense (general) 10,500 Store Supplies Expense (selling) 300 ALLE

I'm really just needing something to cross-check.

Answer 1

Answer -

(a) Answer -

Total current assets = Cash + Accounts receivable + Merchandise inventory + Store supplies + Office supplies + Prepaid insurance

Total current assets = $12300 + $25000 + $16000 + $1100 + $600 + $1500

Total current assets = $56500

(b) Answer -

Working capital = Total current assets - Total current liabilities

Working capital = $56500 - ($22300 + $400)

Working capital = $33800

Here, Current liabilities are accounts payable and salaries payable

(c) Answer -

Current ratio = (Current assets / Current liabilities)

Current ratio = ($56500 / $33800)

Current ratio = 1.67 to 1 Or 1.67 times

(d) Answer -

Accounts receivable turnover = (Net credit sales / Average accounts receivable)

Accounts receivable turnover = ($61000 / $24100)

Accounts receivable turnover = 2.53 to 1

Here,

Net credit sales = Sales - Sales returns and allowances = $61500 - $500 = $61000

Average accounts receivable = (Beginning accounts receivable + Ending accounts receivable) / 2 = ($23200 + $25000) / 2 = $24100