Question

Problem 7-11
Balance Sheet Analysis

Complete the balance sheet and sales information in the table that follows for J. White Industries using the following financial data:

Total assets turnover: 1.5
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 24%
Total liabilities-to-assets ratio: 35%
Quick ratio: 0.95
Days sales outstanding (based on 365-day year): 31.5 days
Inventory turnover ratio: 5.0

Round your answers to the nearest whole dollar.

Partial Income	Statement Information
Sales	$
Cost of goods sold	$

Balance Sheet

Cash	$	Accounts payable	$
Accounts receivable	$	Long-term debt	$  50,000
Inventories	$	Common stock	$
Fixed assets	$	Retained earnings	$  100,000
Total assets	$  400,000	Total liabilities and equity	$

Answer 1

Calculating the Balance Sheet and Income Statement information:-

- Total Asset Turnover = Net Sales/Total Assets

1.5 = Net Sales/$400,000

Net Sales = $600,000

- Gross profit margin on sales= (Sales - Cost of goods sold)/Sales

0.24 = (600,000-COGS)/600,000

144,000 = 600,000-COGS

COGS = $ 456,000

- Total liabilities-to-assets ratio = Total liabilities/Total Assets

0.35 = Total liabilities/$400,000

Total liabilities = $140,000

- Total liabilities = Accounts Payable + Long-term debt

140,000 = Accounts Payable + 50,000

Accounts Payable = $90,000

- Days' sales outstanding = (Accounts Receivables/Net Sales)*365

31.5 = (Accounts Receivables/600,000)*365

Accounts Receivables = $51,781

- Inventory turnover ratio = COGS/Inventory

5 = 456,000/Inventory

Inventory = $91,200

- Quick ratio = (Cash +Accounts receivable)/Accounts Payable

0.95 = (Cash + 51,781)/90,000

Cash = $33,719

- Total Assets = Cash +Accounts receivable + Inventory + Fixed assets

400,000 = 33,719 + 51,781 + 91,200 + Fixed Assets

Fixed assets = $223,300

- Total Assets = Total liabilities and Equity = $400,000

Total liabilities and Equity = Total Liabilities + Common stock + Retained Earnings

400,000 = 140,000 + Common stock + 100,000

Common stock = $160,000

Partial Income	Statement Information
Sales	$600,000
Cost of goods sold	$ 456,000

Balance Sheet

Cash	$ 33,719	Accounts payable	$90,000
Accounts receivable	$ 51781	Long-term debt	$  50,000
Inventories	$ 91,200	Common stock	$160,000
Fixed assets	$ 223,300	Retained earnings	$  100,000
Total assets	$  400,000	Total liabilities and equity	$400,000

If you need any clarification regarding this solution, then you can ask in comments

If you like my answer then please Up-vote as it will be motivating.