Question

Consider the following income statement for the Heir Jordan Corporation: HEIR JORDAN CORPORATION Income Statement Sales $ 46,200 Costs 34,200 Taxable income $ 12,000 Taxes (30%) 3,600 Net income $ 8,400 Dividends $ 2,800 Addition to retained earnings 5,600 The balance sheet for the Heir Jordan Corporation follows. Based on this information and the income statement, supply the missing information using the percentage of sales approach. Assume that accounts payable vary with sales, whereas notes payable do not. (Leave no cells blank - be certain to enter "0" whenever the item is not a constant percentage of sales. Enter each answer as a percent rounded 2 decimal places, e.g., 32.16.) HEIR JORDAN CORPORATION Balance Sheet Percentage of Sales Percentage of Sales Assets Liabilities and Owners’ Equity Current assets Current liabilities Cash $ 2,450 Accounts payable $ 4,000 Accounts receivable 4,000 Notes payable 8,400 Inventory 9,000 Total $ 15,450 Total $ 12,400 Long-term debt $ 21,000 Owners’ equity Common stock and paid-in surplus $ 14,000

Retained earnings 5,650 Fixed assets Net plant and equipment $ 37,600 Total $ 19,650 Total assets $ 53,050 Total liabilities and owners’ equity $ 53,050

Answer 1

The percentage of sales is calculated as account balance divided by sales revenue.
Balance sheet along with percentage of sales is shown below
HEIR JORDAN CORPORATION
Balance sheet
Assets	Amount	% of sales	Liabilities and owner's equity	Amount	% of sales
Current assets			Current liabilities
Cash	$2,450	5.30%	Accounts payable	$4,000	8.66%
Accounts receivable	$4,000	8.66%	Notes payable	$8,400	0.00%
Inventory	$9,000	19.48%
Total	$15,450	33.44%	Total	$12,400	0.00%
			Long term debt	$21,000	0.00%
			Owner's equity
			Common stock and paid in surplus	$14,000	0.00%
Fixed assets			Retained earnings	$5,650	0.00%
Net plant and equipment	$37,600	81.39%	Total	$19,650	0.00%
Total assets	$53,050	114.83%	Total liabilities and stockholder's equity	$53,050	0.00%
Calculation of percentage of sales
Cash	2450/46200	5.30%
Accounts receivable	4000/46200	8.66%
Inventory	9000/46200	19.48%
Total current assets	15450/46200	33.44%
Net plant and equipment	37600/46200	81.39%
Total assets	53050/46200	114.83%
Accounts payable	4000/46200	8.66%