Question

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

Total assets turnover: 1.1×
Days sales outstanding: 73.0 days^a
Inventory turnover ratio: 4×
Fixed assets turnover: 3.0×
Current ratio: 2.5×
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 30%
^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	67,500
Inventories			Common stock
Fixed assets			Retained earnings	67,500
Total assets	$270,000		Total liabilities and equity	$
Sales	$		Cost of goods sold	$

Answer 1

Balance sheet Preparation :

First using Total Asset Turnover we will find the sales figure :

Total Asset Turnover = Net sales / Total Assets

1.1 = Net Sales / 270,000

==> Net Sales = 270000 * 1.1 = 297000

Using Fixed Assets Turnover Ratio find the figure of Fixed Assets :

Fixed Asset Turnover Ratio = Net sales / Fixed Assets

3.0 = 297000 / Fixed Assets

==> Fixed Assets = 297000 / 3

= 99000

Total Assets = Fixed Assets + Current assets

270,000 = 99000 + Current Assets

==> Current Assets = 270000 - 99000

= 171,000

Using Current Ratio

Current Ratio = Current assets / Current Liabilities

2.5 = 171000 / Current Liabilities

==> Current Liabilities = 171000 / 2.5

= 68400

Using Gross profit margin on sales find Cost of Goods Sold :

(Sales - Cost of goods sold)/Sales = 30%

(297000 - Cost of Goods Sold) / 297000 = 30%

297000 - Cost of Goods Sold = 297000 * 30%

==> Cost of Goods sold = 297000 - 89100

= 207900

Days sales Outstanding = (Accounts Receivable / Total Credit sales) * 365

73 = (Accounts Receivable / 297000) * 365

Accounts Receivable = (73 * 297000) / 365

= 59400

Inventory Turnover Ratio = Cost of Goods sold / Inventory

4 = 207900 / Inventory

==> Inventory = 207900 / 4

= 51975

Cash Balance = Current Assets - Inventory - Receivables

= 171000 - 51975 - 59400

= 59625

Common Stock = Total Liabilities and equity - Current Liabilities - Long Term Debt - Retained Earning

= 270000 - 68400 - 67500 - 67500

= 66600

Balance Sheet

Assets	Amount	Liabilities and Equity	Amount
Cash	59625	Current Liabilities	68400
Accounts Receivable	59400	Long Term Debt	67500
Inventory	51975	Common Stock	66600
Fixed Assets	99000	Retained Earning	67500
Total Assets	270000	Total Liabilities and Equity	270,000
Sales	297000	Cost of Goods Sold	207900