Use this account information to answer the following questions: 2019 - Selected Income Statement Items for Rian
Question:
Use this account information to answer the following questions: 2019 - Selected Income Statement Items for Rian Company Cash Sales $298,000 Credit Sales $672,000 Total Sales $970,000 Cost of goods sold $570,000 2018& 2019 - Selected Balance Sheet Accounts of Rian Company 31/12/19 31/12/18 Change Accounts Receivable $38,000 $46,000 $8,000 Inventory $55,000 $59,000 $4,000 Accounts Payable $27,000 $25,000 $2,000 Required:
a. Find the average production cycle for Rian Company. (4 marks)
b. For the coming year, Rian Company wants to reduce its average production cycle to thirty days. If the target-ending inventory for 2020 is $61,000, what cost of goods sold will the company need to reach its goal? (4 marks)
c. What is the average collection cycle for RianCompany? (4 marks)
d. Rian Company had a target of twenty days for the collection cycle for the year 2019. If total sales had remained at $970,000, how much of the sales revenue would have needed to be cash sales for the company to meet the collection goal? (4 marks)
e. Calculate Rian Company's average accounts payable cycle. (4 marks)