Problem 1. The following information applies to Barnhart Company:
- Net Credit Sales = $220,000
- Beginning Accounts Receivable = $10,000
1) Compute Barnhart's:
a) Quick ratio
b) Current ratio
c) Working capital
d) Accounts receivable turnover
e) Average days to collect receivables
Problem 2. The Jiffy Manufacturing Company started operations in 2012 when it acquired $100,000 from its owners. During the year, the company incurred the following costs:
The company placed 12,000 units into production, completed 10,000 units, and sold 8,000 units. The average selling price was $17 per unit.
1) Prepare a schedule of cost of goods manufactured and sold for the year ended December 31, 2012.
2) Prepare an income statement for the year ended December 31, 2012.
This solution handles both ratio analysis and manufacturing accounting. It gives a detailed explanation of the calculation of particular ratios and also shows how one should go about calculating the cost of goods manufactured and the net income for a manufacturing firm.