How can the quick ratio be determined with the given information? Email from Accounting ManagerTo: Andy Barker, Accounting AssociateFrom: Doris Butterscotch, Accounting ManagerRE: Inventory CostsHi Andy,This is the first year we are adopting the EOQ model in inventory management. The CFO wants us to calculate cost of goodssold and inventory turnover for the year.LWe do not produce the powerbanks ourselves. We purchase them from the wholesaler and resell them to customers.Therefore, inventory costs consist of only purchase costs, fixed ordering costs per order, and carrying costs. Because we usea computer reorder system, there are no stockout costs.We signed a contract with the wholesaler that fixes the purchase cost per powerbank and the order cost per order from 20X1to 20X3. Carrying cost averages $6 per powerbank, and annual demand is expected to be 144,000 units.Please contact me if you need additional information.Regards,Doris Financial Information / RatioFinancial Information20X1Sales ($50 per unit)$6,650,000Current assets$4,000,000Current liabilities$2,840,500Note: The difference between the current and the quick ratio is due to inventory only.Contract with SupplierBill to:Ferguson Company510 SW 23rd St.Dayton, Ohio 23716DescriptionPowerbankProcessing feeQuantity?Order: 12137September 10, 20X1Price$30TotalThank you for your business!

Quick Ratio: Quick ratio is a liquidity ratio calculated for the purpose of evaluating the liquidity…

Answered: How can the quick ratio be determined…

Century 21 Accounting General Journal

11th Edition

ISBN:9781337680059

Author:Gilbertson

Publisher:Gilbertson

Chapter20: Accounting For Inventory

Section: Chapter Questions

Problem 1ANFS

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Inventory Costing When Inventory Quantities Are Small A number of companies have adopted a just-in-time procedure for acquiring inventory. These companies have arrangements with their suppliers that require the supplier to deliver inventory just as the company needs the goods. As a result, just-in-time companies keep very little inventory on hand. Required: Once a company has switched to the just-in-time procedure and has little inventory, should the inventory costing method (LIFO or FIFO) affect cost of goods sold?
Which of the following is an advantage of the periodic inventory system? A. frequent physical inventory counts B. cost prohibitive C. time consuming D. real-time information for managers
You have been hired by Johnson and Johnson Corp. this year. Your supervisor approaches you and need you recommendation on the inventory valuation assumption you will recommend for the company to use instead to using Specific Identification method. Instruction: Identify each of the cost flow assumptions that company can use. Explain the advantages and disadvantages of using each of them. Each one will you recommend and Why? What are the characteristics of a Just-in-time inventory system? Explain some advantages and risks of Just-in-time inventory system.
You work for a CPA firm that has been hired by Widget Tek, a merchandising company that is getting ready to expand. The president of Widget Tek is concerned with obtaining a loan for the expansion and wants to be sure that all the financial statements accurately reflect the company’s accounting records. As preparation for this assignment, you have been asked to review the effects of changing prices on three inventory costing methods: LIFO, FIFO, and weighted average. Identify the scenarios and inventory methods that result in the highest and lowest values for each item listed. Enter “Highest”, “Lowest”, or leave the box blank. Cost of Merchandise Sold Ending Merchandise Inventory Net Income LIFO, when prices are rising FIFO, when prices are falling FIFO, when prices are rising Weighted average, when prices are rising Weighted average, when prices are falling LIFO, when prices are falling
Journal entries for recording revenue and costs for service provider. For a traditional inventory-carrying companies, recording journal entries for revenue and costs is something like the following: Dr. Cash $100 Cr. Revenue $100 Dr. Cost of goods sold $50 Cr. Inventory $50 How does the journal entry work for service companies such as SaaS firms that do not carry inventory?
Concept Integration. Your appliance manufacturingcompany recently implemented a just-in-time inventory system (see Chapter 9) for all parts used in themanufacturing process. How might you expect thismove to affect the company’s inventory turnover rate,current ratio, and quick ratio?
First In, First Out Suppose you are the assistant controller for a retail establishment that is an independent bookseller. The company uses manual, periodic inventory updating, using physical counts at year end, and the FIFO method for inventory costing. How would you approach the subject of whether the company should consider switching to computerized perpetual inventory updating? Can you present a persuasive argument for the benefits of perpetual? Explain.
Every day, businesses have to make decisions that affect their bottom line. One such decision pertains to valuing inventory. Imagine that you have decided to open a new electronics store. As one of your first tasks, your accountant has asked you to adopt an inventory cost assumption for inventory valuation. Explain which method you would adopt and why.
LIFO and FIFO are two key inventory reporting options for organizations. For this discussion, discuss the tradeoffs between LIFO and FIFO. Provide examples using companies that utilize each of these strategies. I need 300 words, thanks.
The ABC approach to inventory management is based on the concept that: Multiple Choice inventory should arrive at the time it is needed in the manufacturing process. the inventory period should be constant for all inventory items. basic inventory items that are essential to production and also inexpensive should be ordered in small quantities only. a small percentage of inventory items represents a large percentage of inventory cost. one-third of a year's inventory needs should be on hand, another third should be on order, and the last third should be unordered.
S Required information [The following information applies to the questions displayed below.] You have been given responsibility for overseeing a bank's small business loans division. The bank has included loan covenants requiring a minimum current ratio of 1.40 in all small business loans. When you ask which inventory costing method the covenant assumes, the previous loans manager gives you a blank look. To explain to him that a company's inventory costing method is important, you present the following balance sheet information. Current assets other than inventory Inventory Other (noncurrent) assets Total assets Current liabilities Other (noncurrent) liabilities Stockholders' equity Total liabilities and stockholders' equity $ 27 (a) 141 $ (b) $ 70 78 (d) $ (c) You ask the former loans manager to find amounts for (a), (b), (c), and (d) assuming the company began the year with 5 units of inventory at a unit cost of $14, then purchased 8 units at a cost of $15 each, and finally purchased…
State which of the following inventory methods would best attain the goals of management. Indicate your answer by writing the proper letter in the blank beside each specific goal. FIFO LIFO Weighted-average Specific identification Management wants to report approximate current inventory replacement costs on its year-end balance sheet during a period of rising prices. Management wants to maximize net income during a period of rising prices. The company sells yachts, deep-sea fishing boats, and off-shore speed boats. Management wants to maximize net income during a period of falling prices. Management wants to minimize net income during a period of falling prices. Management wants to match current cost of goods sold with

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