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21 December, 09:53

Determine Net Sales, Cost of goods sold and Net Income. Additional information follows: Return on total assets is 16% (average total assets is $88,000). Inventory turnover is 6 (average inventory is $6,900). Accounts receivable turnover is 9 (average accounts receivable is $7,900).

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  1. 21 December, 12:11
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    Net Sales = $71,100

    Cost of Goods Sold = $41,400

    Net Income = $12,320

    Explanation:

    Accounts Receivable Turnover = Net Sales / Average Accounts Receivable

    9 = Net Sales / $7,900

    Net Sales = $7,900 x 9

    Net Sales = $71,100

    Inventory Turnover = Cost of Goods sold / Average Inventory

    6 = Cost of Goods Sold / $6,900

    Cost of Goods Sold = $6,900 x 6

    Cost of Goods Sold = $41,400

    Return on total assets = Net Income / average total Assets

    14% = Net Income / $88,000

    Net Income = $88,000 x 14%

    Net Income = $12,320
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