Question

46. The following information is from the records of Armadillo Camera Shop:

Accounts receivable, December 31, 2017	$80,000 (debit)
Net credit sales for 2017	163,000
Accounts written off as uncollectible during 2017	18,000
Cash sales during 2017	42,000

The company uses the direct write-off method for bad debts. What is the amount of bad debts expense?

A.$42,000

B.$18,000

C.$65,000

D. $80,000

47. Blanchard, Inc. provided the following for 2017:

Cost of Goods Sold (Cost of sales)	$1,200,000
Beginning Merchandise Inventory	325,000
Ending Merchandise Inventory	625,000

Calculate the company's inventory turnover ratio for the year. (Round your answer to two decimal places.)

48. Financial analysts perform reviews of companies to ensure compliance to rules and regulations.

True

False

49. The days' sales in inventory ratio is calculated by dividing cost of goods sold by the average merchandise inventory. (T/F)

Answer 1

Question - 46 ......... Option - B $ 18000

Under direct written off method, the years uncollectable accounts directly represents amount to be written off for the year.

Question - 47

Inventory turnover ratio = Cost of goods sold / ( Average Inventory) = 1200,000 / 475,000 = 2.53 times

Here average Inventory = (beginning + Ending ) / 2 = (325000 + 625000) / 2

Question - 48

False

The aim of financial analyist is to identify the financial strengths and weakness inherent in the financial statements. It will be the duty of the auditor or compliance officer to check whether accounting standards recommended for the company are followed or not.

Question - 49

False

Because, for days sales in inventory we use a relation = 365 days / Inventory turnover ratio.