Question

Complete the balance sheet and sales information using the following financial data:

Total assets turnover: 1.2×
Days sales outstanding: 36.5 days^a
Inventory turnover ratio: 5×
Fixed assets turnover: 2.5×
Current ratio: 2.0×
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 15%
^aCalculation is based on a 365-day year.

Do not round intermediate calculations. Round your answers to the nearest dollar.

Balance Sheet
Cash	$		Current liabilities	$
Accounts receivable			Long-term debt	36,000
Inventories			Common stock
Fixed assets			Retained earnings	60,000
Total assets	$240,000		Total liabilities and equity	$
Sales	$		Cost of goods sold	$

Answer 1

Total asset turnover = 1.2

Sales/total assets = 1.2

Sales = 240,000*1.2 =$288,000

Cost Iof goods sold =85%

= 288,000*85%

=$244,800

Days sales outstanding =36.5

365*accounts receivables/sales =36.5

Accounts receivables = 36.5*288,000/365

=$28,800

Inventory turnover ratio = 5

Cost of goods sold/inventory = 5

Inventory = 244,800/5

=$48,960

Fixed assets turnover =2.5

Sales/fixed assets = 2.5

Fixed assets = 288,000/2.5

=$115,200

Cash = total assets - accounts receivables- inventory - fixed assets

= 240,000 - 28,800 -48,960 - 115,200

=$47,040

Current assets = cash + accounts receivables + inventory

=47,040 + 28,800 + 48,960

=$124,800

Current ratio = current assets/current liabilities

Hence, current liabilities = 124,800/2

=62,400

Total liabilities and equity = total assets

=240,000

Common stock = total liabilities and equity- current liabilities- long term debt - retained earnings

= 240,000 - 62,400-36,000-60,000

=$81,600