Compute the operating cycle for King Corporation.

Question:

A partial balance sheet and income statement for King Corporation follow:

KING CORPORATION
Partial Balance Sheet
December 31, 2009
Assets
Current Assets
     Cash $33,493
     Marketable securities 215,147
     Receivables, less allowance of $6,000 255,000
     Inventories, LIFO 523,000
     Prepaid expenses 26,180
Total Current assets $1,052,820
Liabilities
Current liabilities
     Trade accounts payable $103,689
Notes payable (primarily as bonds) and commercial paper 210,381
     Accrued expenses and other liabilities 320,602
     Income taxes payable 3,120
     Long-term debt 22,050
Total current liabilities $459,842

KING CORPORATION
Partial Income Statement
For Year Ended December 31, 2009
Net sales $3,050,600
Miscellaneous income 45,060
$3,095,660
Cost and expenses:
     Cost of sales $2,185,100
     Selling, general and administrative expenses 350,265
     Interest expense 45,600
     Income taxes 300,000
$2,880,965
$214,695

Note: The receivables at December 31, 2008 were $280,000, net of allowance of $8,000, for a gross receivables figure of $288,000. The inventory at December 31, 2008 were $565,000.

Compute the operating cycle for King Corporation.

Operating cycle:

It is the time period which is taken by the company to make their transaction from producing the goods into final sale of goods to the customer and receive the consideration in the form of cash for the final goods.

Answer and Explanation: 1

Become a Study.com member to unlock this answer!

View this answer

1.

{eq}\begin{align*} {\rm\text{Ending Accounts Receivable}} &= {\rm\text {Net Accounts Receivable}} + {\rm\text {Allowance}}\\ &= \$ 255,000 + \$...

See full answer below.

Become a member and unlock all Study Answers

Start today. Try it now

Create an account

Ask a question

Our experts can answer your tough homework and study questions.

Ask a question

Search Answers

Learn more about this topic:

Loading...
Operating Cycle in Accounting: Definition & Formula

from

Chapter 22 / Lesson 42
3.9K

An operating cycle consists of lead time, production time, sales time, delivery time, and cash-collection time. Learn the definitions of the parts of the operating cycle, how long the operation cycles are for different industries, and the formula used for calculating the operating cycle in accounting.

Related to this Question

Explore our homework questions and answers library

Browse by subject