(Solution) BUS 1102 Learning Journal Unit 5 -Chart 1 & 2

COURSE

BUS 1102 – Basic Accounting

The Learning Journal is a space where you should reflect on what was learned during the week and how it applies to your daily life and will help you with your life (career) goals.

For this week, you will be computing different financial ratios based on information presented in the tables below.

Chart 1

 
ABC Group 123 Company
Beginning accounts receivable; $75,000 $92,000
Ending accounts receivable $125,000 $123,000
Net credit sales $324,000 $401,000

Chart 2

 
Balance Sheet Year 1 Income Statement Year 1 Balance Sheet Year 2 Income Statement Year 2
Beginning Inventory
 $29,000 $10,826
    Purchases $10,000 $7,435
Goods Available for Sale $39,000 $18,261
Ending Inventory $10,826 $5,980
Cost of Goods Sold $28,174 $12,281

 

Please complete the following tasks: 

1. Complete each of the calculations listed below (A – C).

A. (Use Chart 1) You are an investor looking to contribute financially to either the ABC Group or the 123 Company. Based on the information provided:

    • Compute the accounts receivable turnover ratio.
    • Compute the number of days’ sales in receivables ratio for both ABC Group and 123 Company (round all answers to two decimal places).
    • Interpret the outcomes, stating which company you would invest in and why.

B. (Use Chart 2) Compute the inventory turnover ratio.

    • Interpret the outcomes

C. (Use Chart 2) Compute the number of days’ sales in inventory ratio.

    • Interpret the outcomes

2. Interpret the outcomes for each of the calculations performed using chart 1 and chart 2 (A – C).

3. Did you encounter issues completing any Unit 5 assignments? Please explain.

4. You are halfway through the course. What are your thoughts about the course and the material that has been covered at this point?

Be sure that your Learning Journal entry is a minimum of 500 words. Make sure you cite and reference your sources of information in the APA format.

SOLUTION  

  1. Complete each of the calculations listed below (A – C). 
  2. (Use Chart 1) You are an investor looking to contribute financially to either the ABC Group or the 123 Company. Based on the information provided: 
    • Compute the accounts receivable turnover ratio. 

The Accounts Receivable Turnover may be determined by dividing the total value of sales made on credit during a certain time by the average amount of accounts receivable for that period.

123 Company; $401,000/ ($92,000+$123,000)/2= 3.73

ABC Group; $324,000/ ($75,000+$125,000)/2= 3.24

    • Compute the number of days’ sales in receivables ratio for both ABC Group and 123 Company (round all answers to two decimal places). 

One way to estimate how quickly money moves through accounts receivable is to divide the number of days in a year by the turnover ratio of AR from a prior year.

123 Company; 365/3.73 = 97.85……..

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