# hw3 - Homework#3 Due Tuesday E5-6 1 E5-12 2 P5-7A High...

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Homework #3 Due Tuesday, September 19, 2006 E5-6 1

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E5-12 2
P5-7A High Point Department Store Income Statement (Partial) Year Ended December 31, 2005 Net Sales \$710,000 Cost of Goods Sold (394,700) Gross Margin \$315,300 BYP5-8 3

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E6-4 E6-8 4
E6-10 5

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BYP6-11 6
10. The following information is available for the Watkins Corporation. For the balance sheet accounts, the year-end amounts are given, the income statement amounts are for the year listed. 2002 2001 2000 Net Sales (total) \$325,500 \$290,400 \$280,500 Net Credit Sales \$120,700 \$140,600 \$150,200 Accounts Receivable \$22,800 \$19,400 \$14,000 Cost of Goods Sold \$210,200 \$194,500 \$185,300 Accounts Payable \$40,700 \$32,500 \$35,200 Depreciation Expense \$12,000 \$12,800 \$11,100 Inventory \$65,300 \$45,200 \$31,600 a. Based on this information, calculate the inventory turnover, the receivables turnover, and the payables turnover for 2001 and 2002. 2001 Inventory turnover = 194,500/38,400 = 5.07 Receivables turnover = 290,400/16,700 = 17.4 Payables turnover = 194,500/33,850 = 5.75 2002 Inventory turnover = 210,200/55,250 = 3.80 Receivables turnover = 325,500/21,100 = 15.4 Payables turnover = 210,200/36,600 = 5.74 b. Is Watkin’s cash cycle a balanced, favorable, or unfavorable one?

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