Question

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: 1.7
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 20%
Total liabilities-to-assets ratio: 50%
Quick ratio: 0.80
Days' sales outstanding (based on 365-day year): 36.5 days
Inventory turnover ratio: 3.25

Do not round intermediate calculations. Round your answers to the nearest whole dollar.

Partial Income Statement Information
Sales	$ 680,000
Cost of goods sold	$ 540,000

Balance Sheet
Assets				Liabilities and Equity
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

Solution:-

Balance sheet of J.WHITE industries:

Assets	Amount	Liabiities and equity	Amount
Cash	$52,000	Accounts payable	$150,000
Accounts receievable	$68,000	Long-term debt	$50,000
Inventories	$166,153.84	Common stock	$100,000
Fixed Assets	$113,846.16	Retained earnings	$100,000
Total Assets	$400,000	Total liabilities and equity	$400,000

Working notes:

1. Days sales outstanding = (receivables * 365) / Annual sales

36.5 = (receivables * 365 / $680,000

Receivables = $680,000 * 36.5 / 365

= $68,000

2. Inventory turnover ratio = COGS / Inventory

3.25 = $540,000 / Inventory

Inventory = $540,000 / 3.25

= $166,153.84

3.Total liabilitie to assets ratio = Total liabilities / total assets

50% = Total liabilities / $400,000

Total liabilities = $400,000 * 50%

= $200,000

4.Accounts payable = Total liabilities - Long ter debt

= $200,000 - $50,000

= $150,000

5.Quick ratio = Casf + accounts receivable / acconts payable

0.8 = cash + $68,000 / $150,000

Cash = $52,000

6. Fixed assets = Total assets - current assets

= $400,000 - ($68,000 + $52,000 + $166,153.84)

= $113,846.16

7.Common stock = Total liabilities and equity - (liabilities + retained earnings)

= $400,000 - ($200,000 + $100,000)

= $400,000 - $300,000

= $100,000