Canadian Bacon Inc. financial statements are presented in the table below. Based on the information in the table, and using a 365-day year, calculate operating cycle. Round the answers to two decimal places Balance Sheet December 31, 2012 Income Statement, Year of 2012 Solution Operating Cycle = [(365/ Purchases) x Average Inventories] + [(365/ Credit Sales) x Accounts Receivable] = [(365/ 6112746) x 577000] + [(365/ 7546600) x 469000] = 57.14 days .

1. Canadian Bacon Inc. financial statements are presented in the table below.
Based on the information in the table, and using a 365-day year, calculate operating cycle.
Round the answers to two decimal places
Balance Sheet December 31, 2012
Income Statement, Year of 2012
Cash and marketable
securities
$198,000 Accounts payable $288,000
Accounts receivable $469,000 Notes payable $65,000
Inventories $577,000 Accrued expenses $84,000
Prepaid expenses $15,700 Total current liabilities $437,000
Total current assets $1,259,700 Long-term debt $237,000
Gross fixed assets $1,954,000 Par value and paid-in-capital $199,000
Less: accumulated
depreciation
$476,000 Retained Earnings $1,864,700
Net fixed assets $1,478,000 Common Equity 2,063,700
Total assets $2,737,700 Total liabilities and owner’s equity $2,737,700
Solution
Operating Cycle = [(365/ Purchases) x Average Inventories] + [(365/ Credit Sales) x Accounts
Receivable]
= [(365/ 6112746) x 577000] + [(365/ 7546600) x 469000]
= 57.14 days