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    Inventory & AC Turnover

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    Islander Company Data:
    As of December 31,
    Balance Sheet Data 2011 2010
    Accounts receivable $500,000 $470,000
    Allowance for doubtful accounts (25,000) (20,000)
    Net accounts receivable $475,000 $450,000
    Inventories - lower of cost or market $600,000 $550,000

    Year Ended December 31,
    Income Statement Data 2011 2010
    Net credit sales $2,500,000 $2,200,000
    Net cash sales 500,000 400,000
    Net sales $3,000,000 $2,600,000
    Cost of goods sold $2,000,000 $1,800,000
    Selling, general, and administrative expenses 300,000 270,000
    Other 50,000 30,000
    Total operating expenses $2,350,000 $2,100,000

    a. What is the accounts receivable turnover for 2011?
    b. What is the inventory turnover for 2011?

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    Islander Company Data:
    As of December 31,
    Balance Sheet Data 2011 2010
    Accounts receivable $500,000 $470,000
    Allowance for doubtful accounts (25,000) (20,000)
    Net accounts receivable $475,000 $450,000
    Inventories ...

    Solution Summary

    Islander Company Data:
    As of December 31,
    Balance Sheet Data 2011 2010
    Accounts receivable $500,000 $470,000
    Allowance for doubtful accounts (25,000) (20,000)
    Net accounts receivable $475,000 $450,000
    Inventories - lower of cost or market $600,000 $550,000

    Year Ended December 31,
    Income Statement Data 2011 2010
    Net credit sales $2,500,000 $2,200,000
    Net cash sales 500,000 400,000
    Net sales $3,000,000 $2,600,000
    Cost of goods sold $2,000,000 $1,800,000
    Selling, general, and administrative expenses 300,000 270,000
    Other 50,000 30,000
    Total operating expenses $2,350,000 $2,100,000

    a. What is the accounts receivable turnover for 2011?
    b. What is the inventory turnover for 2011?

    $2.19