Lendell Company has these comparative balance sheet data: Lendell Company
Balance Sheets
December 31
2020 2019
Cash $ 16,000 $ 29,000
Accounts receivable (net) 71,000 61,000
Inventory 61,000 51,000
Plant assets (net) 200,000 176,000
$348,000 $317,000
Accounts payable $50,000 $59,400
Mortgage payable (15%) 106,000 106,000
Common stock, $10 par 143,000 115,000
Retained earnings 49,000 36,600
$348,000 $317,000
Additional information for 2020:
1. Net income was $25,200.
2. Sales on account were $415,300. Sales returns and allowances amounted to $19,300.
3. Cost of goods sold was $196,000.
4. Net cash provided by operating activities was $44,400.
5. Capital expenditures were $26,200, and cash dividends were $8,900.
Compute the following ratios at December 31, 2020. (Round current ratio to 2 decimal places, e. g. 1.67. Round Accounts receivable turnover, Average collection period, Inventory turnover and Days in inventory to 1 decimal place, e. g. 1.6.)
a. Current ratio
b. Accounts receivable turnover
c. Average collection period
d. Inventory turnover
e. Days in inventory

Lendell Company

a. Current ratio = Current assets/Current liabilities

= $148,000/50,000

= 2.96

= 3

b. Accounts Receivable Turnover = Net Sales/Average Accounts Receivable

= $396,000/66,000

= 6 times

c. Average collection period  = Average Accounts Receivable/Net Sales * 365 days

= $66,000/$396,000 * 365

= 60.8 days

d. Inventory turnover  = Cost of Goods Sold/Average Inventory

= $196,000/56,000

= 3.5 times

e. Days in inventory = 365/3.5

104.3 days

Explanation:

a) Data and Calculations:

Lendell Company

Balance Sheets

December 31

                                                    2020           2019            Average

Cash                                       $ 16,000     $ 29,000         $ 22,500

Accounts receivable (net)         71,000         61,000            66,000

Inventory                                   61,000         51,000            56,000

Current assets                     $148,000      $141,000       $144,500

Plant assets (net)                  200,000        176,000          188,000

                                            $348,000     $317,000       $332,500

Accounts payable                 $50,000      $59,400         $54,700

Mortgage payable (15%)        106,000      106,000          106,000

Common stock, $10 par        143,000       115,000          129,000

Retained earnings                  49,000       36,600            42,800

                                           $348,000    $317,000       $332,500

Additional information for 2020:

1. Net income was $25,200.

2. Sales on account were $415,300.

Sales returns and allowances amounted to $19,300.

Net Sales $396,000

3. Cost of goods sold was $196,000.

4. Net cash provided by operating activities was $44,400.

5. Capital expenditures were $26,200

Cash dividends were $8,900

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