when computing days' sales in inventory? Discuss. P 6-11 A partial balance sheet and income statement for King Corporation follow: KING CORPORATION Partial Balance Sheet December 31, 2011 Assets 33,493 Current assets: Cash Marketable securities 215,147 255,000 523,000 26,180 $1,052,820 Trade receivables, less allowance of $6,000 Inventories, LIFO Prepaid expenses Total current assets Liabilities Current liabilities: Trade accounts payable Notes payable (primarily to banks) and commercial paper Accrued expenses and other liabilities Income taxes payable Current maturities of long-term debt Total current liabilities $ 103,689 210,381 120,602 3,120 22,050 $ 459,842 KING CORPORATION Partial Income Statement For Year Ended December 31, 2011 $3,050,600 45,060 $3,095,660 Net sales Miscellaneous income Costs and expenses: Cost of sales $2,185,100 350,265 45,600 300,000 2,880,965 $ 214,695 Selling, general, and administrative expenses Interest expense Income taxes Net income Note: The trade receivables at December 31, 2010, were $280,000, net of an allowance of $8,000, for a gross receivables figure of $288,000. The inventory at December 31, 2010, was $565,000. (continued 54 CHAPTER 6 Liquidity of Short-Tem Assets: Related Debt-Paying Ability (P 6-11 CONTINUED) Required Compute the following Working capital b. Current ratio c. Acid-test ratio d. Cash ratio Days' sales in receivables f. Accounts receivable turnover in days 8. Days' sales in inventory h. Inventory turnover in days i. Operating cycle a. e. P 6-12 1