Question

Problem 3-11
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 = 23%
Total liabilities-to-assets ratio: 55%
Quick ratio: 0.95
Days sales outstanding (based on 365-day year): 31.5 days
Inventory turnover ratio: 6.0

Do not round intermediate calculations. 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

Total Assets Turnover = Sales / Total Assets
1.5 = Sales / $400,000
Sales = $600,000

Gross Profit Margin = (Sales - Cost of Goods Sold) / Sales
23% = ($600,000 - Cost of Goods Sold) / $600,000
$138,000 = $600,000 - Cost of Goods Sold
Cost of Goods Sold = $462,000

Total liabilities-to-assets Ratio = Total Liabilities / Total Assets
55% = Total Liabilities / $400,000
Total Liabilities = $220,000

Total Liabilities = Accounts Payable + Long-term Debt
$220,000 = Accounts Payable + $50,000
Accounts Payable = $170,000

Inventory Turnover = Cost of Goods Sold / Inventories
6.0 = $462,000 / Inventories
Inventories = $77,000

Days Sales Outstanding = 365 * Accounts Receivable / Sales
31.50 = 365 * Accounts Receivable / $600,000
Accounts Receivable = $51,781

Quick Ratio = (Cash + Accounts Receivable) / Accounts Payable
0.95 = (Cash + $51,781) / $170,000
Cash = $109,719

Total Assets = Cash + Accounts Receivable + Inventories + Fixed Assets
$400,000 = $109,719 + $51,781 + $77,000 + Fixed Assets
Fixed Assets = $161,500

Total Liabilities and Equity = Total Assets
Total Liabilities and Equity = $400,000

Total Liabilities and Equity = Accounts Payable + Long-term Debt + Common Stock + Retained Earnings
$400,000 = $170,000 + $50,000 + Common Stock + $100,000
Common Stock = $80,000