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Chapter 2: 34BP_a (page 86)

We are given the following information for the Pettit Corporation.

Sales (credit)

$3,549,000

Cash

179,000

Inventory

911,000

Current liabilities

788,000

Assets turnover

1.40 times

Current ratio

2.95 times

Debt-to-assets ratio

40%

Receivables turnover

7 times

Current assets are composed of cash, marketable securities, accounts receivable, and inventory. Calculate the following balance sheet items.

a. Accounts receivable.

Short Answer

Expert verified

Accounts receivables of the company are $507,000.

Step by step solution

01

Meaning of accounts receivable

Account receivables are treated as the current assets of the company. It is the balance due to the firm for the credit sale of goods and services.

02

Account receivable

Accountsreceivables=NetcreditsalesAccountreceivableturnoverratio=$3,549,0007=$507,000

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Most popular questions from this chapter

In January 2007, the Status Quo Company was formed. Total assets were \(544,000, of which \)306,000 consisted of depreciable fixed assets. Status

Quo uses straight-line depreciation of \(30,600 per year, and in 2007 it estimated its fixed assets to have useful lives of 10 years. Aftertax income has been \)29,000 per year each of the last 10 years. Other assets have not changed since 2007.

a. Compute return on assets at year-end for 2007, 2009, 2012, 2014, and 2016.

(Use $29,000 in the numerator for each year.)

In January 2007, the Status Quo Company was formed. Total assets were \(544,000, of which \)306,000 consisted of depreciable fixed assets. Status

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