Dear Gabriel,
Yes the correct answer is 45 days and I totally agree with you that the question doesnt indicate Sales on Credit explicitly..
Thank you for your help, I wish you have a nice day.
Regards
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TIMUCIN ONER
Director/Manager
ANTALYA
Turkey
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Original Message:
Sent: 09-07-2022 01:25 AM
From: Gabriel Alan Otto
Subject: PART 2 average collection period for account receivables problem
I'm getting D. 45 days, with the assumption of the whole $600,000 being credit sales. It's hard to take into account all of cash flow possibilities just to separate cash and credit sales with the sales figure given above.
What is the correct answer per testbank?
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Gabriel Alan Otto
Accountant
Streamwood IL
United States
Original Message:
Sent: 09-06-2022 12:31 PM
From: TIMUCIN ONER
Subject: PART 2 average collection period for account receivables problem
Dear Friends,
How can we calculate average collection period? I couldnt calculate Net Sales on Credit?
Best regards
The Statement of Financial Position for King Products Corporation for the fiscal years ended June 30, Year 2, and June 30, Year 1, is presented below. Net sales and cost of goods sold for the year ended June 30, Year 2, were $600,000 and $440,000, respectively. | King Products Corporation | | Statement of Financial Position | | (in thousands) | | | June 30 | | | | | | Year 2 | Year 1 | | | | | | Cash | $ 60 | $ 50 | | Marketable securities (at market) | 40 | 30 | | Accounts receivable (net) | 90 | 60 | | Inventories (at lower of cost or market) | 120 | 100 | | Prepaid items | | | | Total current assets | | | | Land (at cost) | $ 200 | $190 | | Building (net) | 160 | 180 | | Equipment (net) | 190 | 200 | | Patents (net) | 70 | 34 | | Goodwill (net) | | | | Total long-term assets | | | | Total assets | | | | Notes payable | $ 46 | $ 24 | | Accounts payable | 94 | 56 | | Accrued interest | | | | Total current liabilities | | | | Notes payable, 10% due 12/31/Year 7 | $ 20 | $ 20 | | Bonds payable, 12% due 6/30/Year 10 | | | | Total long-term debt | | | | Total liabilities | | | | Preferred stock -- 5% cumulative, $100 par, nonparticipating, | | | | authorized, issued and outstanding, 2,000 shares | $ 200 | $200 | | Common stock -- $10 par, 40,000 shares authorized, | | | | 30,000 shares issued and outstanding | 300 | 300 | | Additional paid-in capital -- common | 150 | 150 | | Retained earnings | | | | Total equity | | | | Total liabilities & equity | | |
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Question17) | King Products Corporation's average collection period for the fiscal year ended June 30, Year 2, using a 360-day year was |
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TIMUCIN ONER
Director/Manager
ANTALYA
Turkey
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