Question

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

Total assets turnover: 1.2x
Days sales outstanding: 41.5 days^a
Inventory turnover ratio: 7x
Fixed assets turnover: 3x
Current ratio: 1.5x
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 35%
^aCalculation is based on a 365-day year. Do not round intermediate calculations. Round your answers to the nearest cent.

Balance Sheet
Cash	$		Current liabilities	$
Accounts receivable			Long-term debt	30,000
Inventories			Common stock
Fixed assets			Retained earnings	50,000
Total assets	$200,000		Total liabilities and equity	$
Sales	$		Cost of goods sold	$

Answer 1

First we will calculate sales as per below:

Total assets turnover = Sales / Total assets

1.2 = Sales / $200000

Sales = $200000 * 1.2 = $240000

Next, we will calculate cost of goods sold as below:

Gross profit margin in sales = 35% or 0.35 * Sales

So, Cost of goods sold = (1 - 0.35) * sales

Cost of goods sold = 0.65 * $240000 = $156000

Next we will calculate fixed assets as below:

Fixed assets turnover = Sales / fixed assets

3 = $240000 / Fixed assets

Fixed assets = $240000 / 3 = $80000

Next we will calculate current assets as below:

Total assets = Fixed assets + Current assets

$200000 = $80000 + Current assets

Current assets = $200000 - $80000 = $120000

Next we will calculate current liabilities as below:

Current ratio = Current assets / current liabilities

1.5 = $120000 / Current liabilities

Current liabilities = $120000 / 1.5 = $80000

Next we will calculate accounts receivable as below:

Days' sales outstanding = 365 / Accounts receivable turnover ratio

41.5 = 365 / Accounts receivable turnover ratio

Accounts receivable ratio = 365 / 41.5

Accounts receivables turnover ratio = 8.80

Accounts receivable turnover ratio = Sales / Accounts receivables

8.795 = $240000 / Accounts revceivables

Accounts receivables = $240000 / 8.8 = $27273

Next we will calculate inventory as below:

Inventory turnover ratio = Sales / Inventory

7 = $240000 / Inventory

Inventory = $240000 / 7 = $34286

Next we will calculate cash as below:

Current assets = Cash + inventory + accounts receivable

$120000 = Cash + $34286 + $27273

Cash = $120000 - $34286 - $27273 = $58441

Next we will calculate total liabilities & equity as below:

Total liabilities & equity = Total assets

Total liabilities & equity = $200000

Next we will calculate common stock as below:

Total liabilities & equity = Current liabilities + Long trrm debt + Common stock + Retained earnings

$200000 = $80000 + $30000 + Common stock + $50000

$200000 = $160000 + Common stock

Common stock = $200000 - $160000 = $40000