The Following Data Comes from Beaumont Company's Financial Statements for the Year

question 61

Multiple Choice

The following data comes from Beaumont Company's financial statements for the year ended December 31, 2014.(Assume that the balance sheet amounts represent both average and ending balances.) $$\begin{array} { l r } \text { Cash } & \$ 5,000 \\\text { Accounts receivable } & 75,000 \\\text { Inventory } & 32,500 \\\text { Sales } & 525,000 \\\text { Cost of goods sold } & 315,000 \\\text { Net income } & 42,500\end{array}$$ What are Beaumont's average collection period of accounts receivable and their average number of inventory days on hand closest to? $\begin{array}{ll}\text { Accounts } & \text { Inventory } \\\text { receivable } & \text { days on } \\\text { collection } & \text { hand }\\\text { A) } 52 \text { days } & 38 \text { days } \\\text { B) } 52 \text { days } & 23 \text { days } \\\text { C) } 87 \text { days } & 38 \text { days } \\\text { D) } 87 \text { days } & 23 \text { days }\end{array}$

• A)Option A
• B)Option B
• C)Option C
• D)Option D

Understand credit terms and their implications for financial transactions.

Understand the accounting treatment for merchandise returns from customers.

Distinguish between different types of sales (cash sales, sales on account, sales with bank credit cards).

Recognize the accounting entries for purchases and sales under a perpetual inventory system.

---

Definitions:

Fictitious Invoices

A method of fraud involving invoices for goods or services that were never received or provided.