Calculate the average days collection ratio

Reference no: EM131908437

Problem

LOGIC COMPANY Comparative Income Statement For Years Ended December 31, 2016 and 2017
	2017	2016
Gross sales	22,000	17,250
Sales returns and allowances	1,000	100
Net sales	21,000	17,150
Cost of merchandise (goods) sold	11,250	8,250
Gross profit	9,750	8,900
Operating expenses:
Depreciation	1,000	750
Selling and administrative	4,450	3,500
Research	850	650
Miscellaneous	660	450
Total operating expenses	6,960	5,350
Income before interest and taxes	2,790	3,550
Interest expense	860	650
Income before taxes	1,930	2,900
Provision for taxes	772	1,160
Net income	1,158	1,740

LOGIC COMPANY Comparative Balance Sheet December 31, 2016 and 2017
	2017	2016
Assets
Current assets:
Cash	13,500	10,500
Accounts receivable	18,000	14,000
Merchandise inventory	10,000	15,500
Prepaid expenses	25,500	11,500
Total current assets	67,000	51,500
Plant and equipment:
Building (net)	15,900	12,500
Land	15,000	10,500
Total plant and equipment	30,900	23,000
Total assets	97,900	74,500
Liabilities
Current liabilities:
Accounts payable	14,500	8,500
Salaries payable	8,500	6,500
Total current liabilities	23,000	15,000
Long-term liabilities:
Mortgage note payable	23,600	22,000
Total liabilities	46,600	37,000
Stockholders' Equity
Common stock	22,500	22,600
Retained earnings	28,800	14,900
Total stockholders' equity	51,300	37,500
Total liabilities and stockholders' equity	97,900	74,500

Calculate the average day's collection ratio.

Reference no: EM131908437

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