Question

Canadian Bacon Inc. financial statements are presented in the table below.

           Based on the information in the table, and using a 365-day year, calculate the average collection period (also called Days of Sales in Receivables or Number of Days of Credit).

Round the answers to two decimal places

Balance Sheet December 31, 2011

Cash and marketable securities	$143,000	Accounts payable	$278,000
Accounts receivable	$354,000	Notes payable	$87,000
Inventories	$672,000	Accrued expenses	$65,000
Prepaid expenses	$12,500	Total current liabilities	$430,000
Total current assets	$1,181,500	Long-term debt	$284,000
Gross fixed assets	$1,675,000	Par value and paid-in-capital	$228,000
Less: accumulated depreciation	$500,000	Retained Earnings	$1,414,500
Net fixed assets	$1,175,000	Common Equity	1,642,500
Total assets	$2,356,500	Total liabilities and owner’s equity	$2,356,500

Income Statement Year of 2011

Net sales (all credit)	$3,136,600.00
Less: Cost of goods sold	$2,195,620.00
Selling and administrative expenses	$345,000.00
Depreciation expense	$146,000.00
EBIT	$449,980.00
Interest expense	$45,300.00
Earnings before taxes	$404,680.00
Income taxes	$161,872.00
Net income	$242,808.00

Answer 1