Use the following information to determine the amount of pur

Use the following information to determine the amount of purchases for the period. Ending inventory, December 31, 2010 g inventory. Januory $151,000 O $758.000 O $716,000 $372,000 O $523.000

Solution

Answer to Question 1:

Cost of Goods Sold = Beginning Inventory + Purchases - Ending Inventory
$565,000 = $193,000 + Purchases - $151,000
Purchases = $523,000

Answer to Question 2:

Average Accounts Receivable = ($63,800 + $74,000) / 2
Average Accounts Receivable = $68,900

Days to Collect = 365 * Average Accounts Receivable / Net Sales
Days to Collect = 365 * $68,900 / $904,000
Days to Collect = 27.82 days