Financial Statement Data for the Years Ended December 31 for Parker

question 29

Essay

Financial statement data for the years ended December 31 for Parker Corporation are as follows:

$\begin{array}{lrr}&\underline {\text { Current Year }}&\underline {\text { Prior Year}}\\\text { Sales } & \$ 2,595,600 & \$ 2,409,500 \\\text { Accounts receivable: } & & \\\text { Beginning of the year } & \$ 390,000 & \$ 400,000 \\\text { End of the year } & 434,000 & 390,000\end{array}$
a Determine the accounts receivable turnover for each year.Round to one decimal place.
b Determine the number of days' sales in receivables for each year.Round to whole days.
c Does the change in accounts receivable turnover and number of days' sales in receivables from the first year to the second year indicate a favorable or unfavorable trend?

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Definitions:

Perfect Competition

A market structure where many firms sell identical products, entry and exit are easy, and no single buyer or seller can affect prices.

Marginal Cost (MC)

The increase in total cost that results from producing 1 more unit of output. Marginal costs reflect changes in variable costs.

Marginal Cost

The financial increment incurred by the production of an extra unit of a product or service.

Average Total Cost

It refers to the total cost per unit of output, calculated by dividing the total cost of production by the number of units produced.