Question

Exercise 18-09

Lendell Company has these comparative balance sheet data:

Lendell Company Balance Sheets December 31
		2020			2019
Cash		$ 14,000			$ 29,000
Accounts receivable (net)		69,000			59,000
Inventory		59,000			49,000
Plant assets (net)		195,000			175,000
		$337,000			$312,000
Accounts payable		$50,000			$59,000
Mortgage payable (15%)		100,000			100,000
Common stock, $10 par		135,000			115,000
Retained earnings		52,000			38,000
		$337,000			$312,000

Additional information for 2020:

1.		Net income was $24,000.
2.		Sales on account were $403,000. Sales returns and allowances amounted to $19,000.
3.		Cost of goods sold was $194,400.
4.		Net cash provided by operating activities was $44,000.
5.		Capital expenditures were $27,000, and cash dividends were $8,500.

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		2.84	:1
(b)		Accounts receivable turnover			times
(c)		Average collection period			days
(d)		Inventory turnover		3.6	times
(e)		Days in inventory		101.4	days
(f)		Free cash flow		$ 8500

Please do (b) and (c) with the steps.

Answer 1