PRACTICE EXERCISES
PE 17–1A
Accounts payable $8,400 increase ($78,400 – $70,000), or 12%
Long-term debt $5,760 increase ($101,760 – $96,000), or 6%
PE 17–1B
Temporary investments $10,800 increase ($70,800 – $60,000), or 18%
Inventory $11,000 decrease ($99,000 – $110,000), or –10%
PE 17–2A Amount Percentage
Sales $500,000 100% ($500,000 ÷ $500,000)
Gross profit 140,000 28 ($140,000 ÷ $500,000)
Net income 40,000 8 ($40,000 ÷ $500,000)
PE 17–2B Amount Percentage
Sales $600,000 100% ($600,000 ÷ $600,000)
Cost of goods sold 480,000 80 ($480,000 ÷ $600,000)
Gross profit $120,000 20% ($120,000 ÷ $600,000)
PE 17–3A
a. Current Ratio = Current Assets ÷ Current Liabilities Current Ratio = ($190,000 + $150,000 + $260,000 + $300,000) ÷ $600,000 Current Ratio = 1.5

b. Quick Ratio = Quick Assets ÷ Current Liabilities Quick Ratio = ($190,000 + $150,000 + $260,000) ÷ $600,000 Quick Ratio = 1.0 PE 17–3B
a. Current Ratio = Current Assets ÷ Current Liabilities Current Ratio = ($140,000 + $60,000 + $40,000 + $80,000) ÷ $160,000 Current Ratio = 2.0

b. Quick Ratio = Quick Assets ÷ Current Liabilities Quick Ratio = ($140,000 + $60,000 + $40,000) ÷ $160,000 Quick Ratio = 1.5
PE 17–4A
a. Accounts Receivable Turnover = Net Sales ÷ Average Accounts Receivable Accounts Receivable Turnover = $560,000 ÷ $40,000 Accounts Receivable Turnover = 14.0

b. Number of Days’ Sales in Receivables = Average Accounts Receivable ÷
Average Daily Sales Number of Days’ Sales in Receivables = $40,000 ÷ ($560,000 ÷ 365) = $40,000 ÷ $1,534 Number of Days’ Sales in Receivables = 26.1 days
PE 17–4B
a. Accounts Receivable Turnover = Net Sales ÷ Average Accounts Receivable Accounts Receivable Turnover = $600,000 ÷ $60,000 Accounts Receivable Turnover = 10.0

b. Number of Days’ Sales in Receivables = Average Accounts Receivable ÷