Question

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

Total assets turnover: 1.4×
Days sales outstanding: 36.5 days^a
Inventory turnover ratio: 5×
Fixed assets turnover: 3.0×
Current ratio: 2.0×
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 dollar.

Balance Sheet
Cash	$		Current liabilities	$
Accounts receivable			Long-term debt	60,000
Inventories			Common stock
Fixed assets			Retained earnings	72,000
Total assets	$240,000		Total liabilities and equity	$
Sales	$		Cost of goods sold	$

Answer 1

1. Total asset turnover ratio=1.4

Sales/Total assets=1.4

Sales=Total assets*1.4=240,000*1.4=$336,000

2. Cost of goods sold=Sales*(1-gross profit margin)=336000*(1-35%)=218,400

3. Inventory turnover ratio=5

Cost of goods sold/Inventory=5

Inventory=218,400/5=43,680

4. Days sales outstanding=36.5

(Accounts receivable/Sales)*365=36.5

Accounts receivable=36.5*336000/365=33,600

5. Fixed asset turnover ratio=3

Sales/Fixed assets=3

Fixed assets=Sales/3=336000/3=112000

6. Cash=Total assets-Fixed assets-Inventory-Accounts receivables=240000-112000-43680-33600=50,720

7.Current assets=Cash+accounts receivables+Inventories=50720+33600+43680=128000

Current ratio=2

current assets/current liabilities=2

current liabilities= current assets/2=128000/2=64,000

8. Common stock=Total assets-Current liabilities-Long term debt-Retained earnings=240,000-64,000-60,000-72,000=44,000

9. Total liabilities and equity=Current liabilities+Long term debt+Common stock+Retained earnings=64000+60000+44000+72000=240,000