Excerpts from Dowling Company's December 31, 2016 and 2015, financial statements and key ratios are presented below (all dollar values are in millions):

	2016	2015
Accounts receivable	$38	$15
Net sales	$250	70
Cost of goods sold	$123	108
Net income	$38	14
Inventory turnover	6.00
Return on assets	12.1%
Equity Multiple	2.54

Dowling's 2016 average collection period is (Round your answer to whole number):

35 days.

45 days.

39 days.

36 days.

Excerpts from Dowling Company's December 31, 2016 and 2015, financial statements and key ratios are presented below (all dollar values are in millions):

	2016	2015
Accounts receivable (net)	$34	$13
Net sales	$200	80
Cost of goods sold	$110	95
Net income	$34	20
Inventory turnover	5.50
Return on assets	11.7%
Equity Multiple	2.50

Dowling's return on equity for 2016 is (Round your answer to whole percentage):

27%.

29%.

17%.

8%.

Excerpts from Dowling Company's December 31, 2016 and 2015, financial statements and key ratios are presented below (all dollar values are in millions):

	2016	2015
Accounts receivable (net)	$30	26
Net sales	$150	128
Cost of goods sold	$104	89
Net income	$30	27
Inventory turnover	6.50
Return on assets	11.2%
Equity multiple	2.45

Dowling's average total assets for 2016 is (Round your answer to whole number):

52.

270.

150.

268.

On December 15, 2016, Rigsby Sales Co. sold a tract of land that cost $3,800,000 for $5,000,000. Rigsby appropriately uses the installment sales method of accounting for this transaction. Terms called for a down payment of $420,000 with the balance in two equal annual installments payable on December 15, 2017, and December 15, 2018. Ignore interest charges. Rigsby has a December 31 year-end.

At December 31, 2017, Rigsby would report in its balance sheet:

Deferred gross profit of $549,600.

Realized gross profit of $549,600.

Realized gross profit of $420,000.

Cost of installment sales $1,740,400.

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Lake Power Sports sells jet skis and other powered recreational equipment. Customers pay one-third of the sales price of a jet ski when they initially purchase the ski, and then pay another one-third each year for the next two years. Because Lake has little information about the ability to collect these receivables, it uses theinstallment sales method for revenue recognition. In 2015, Lake began operations and sold jet skis with a total price of $900,000 that cost Lake $450,000. Lake collected $300,000 in 2015, $300,000 in 2016, and $300,000 in 2017 associated with those sales. In 2016, Lake sold jet skis with a total price of $1,890,000 that cost Lake $1,134,000. Lake collected $630,000 in 2016, $550,000 in 2017, and $550,000 in 2018 associated with those sales. In 2018, Lake also repossessed $160,000 of jet skis that were sold in 2016. Those jet skis had a fair value of $60,000 at the time they were repossessed.

In 2015, Lake would recognize realized gross profit of:

$150,000.

$300,000.

$ 0.

$450,000.

Answer rating: 100% (QA)

Question 1 Calculation of Average Collection Period Accounts Receivable Turnover ratio Net Credit Sa... View the full answer