PRINCIPLES OF ACCOUNTING ASSIGNMENT
1. What is the acid-test ratio? How does it measure a company's liquidity? Explain with Example.
2. The following information is available for the McCartney Corporation:
|
Sales
|
$750,000
|
|
Cost of goods sold
|
450,000
|
|
Gross profit
|
300,000
|
|
Operating income
|
85,000
|
|
Net income
|
42,000
|
|
Inventory, beginning-year
|
71,200
|
|
Inventory, end-of-year
|
48,800
|
Calculate the company's inventory turnover and its days' sales in inventory.
3. A company made the following merchandise purchases and sales during the month of July:
|
July 1 purchased
|
380
|
units at
|
$15 each
|
|
July 5 purchased
|
270
|
units at
|
$20 each
|
|
July 9 sold
|
500
|
units at
|
$55 each
|
|
July 14 purchased
|
300
|
units at
|
$24 each
|
|
July 20 sold
|
250
|
units at
|
$55 each
|
|
July 30 purchased
|
250
|
units at
|
$30 each
|
There was no beginning inventory. If the company uses the first-in, first-out perpetual inventory method what would be the cost of the ending inventory?