Question

Selected data from the financial statements of Crossette Garden Centre is provided below.

	2017	2016
Accounts receivable	$70 000	$46 000
Inventory	10 000	17 000
Total assets	470 000	360 000
Net sales	350 000	270 000
Cost of goods sold	170 000	220 000

Which of the following would result from an analysis of the company's statement of comprehensive income?

		Net Sales increased $80 000 or 33.63% during 2017
		Gross profit is 57.90% of net sales for 2017
		Accounts receivable is 14.89% of total assets for 2017
		Cost of goods sold is 44.75% of net sales for 2017

Answer 1

a.Net Sales increased =(350,000-270,000)=$80,000

=(80,000/Sales in 2016)

=(80,000/270,000)=29.63%(Approx) during 2017

b.Gross profit=Net Sales-Cost of goods sold

=(350,000-170,000)=$180,000

Gross profit %=Gross profit/Net sales

=$180,000/350,000

=51.43%(Approx).

c.AR% =AR/Total assets

=(70,000/470,000)

=14.89%(Approx).

d.COGS%=COGS/Net sales

=(170,000/350,000)

=48.57%(Approx).

Hence the correct option is :

Accounts receivable is 14.89% of total assets for 2017