Question

The following information is from Harrelson Inc.'s, financial statements. Sales (all credit) were $37.80 million for last year.    

Sales to total assets	2.10	times
Total debt to total assets	30	%
Current ratio	2.60	times
Inventory turnover	5	times
Average collection period	10	days
Fixed asset turnover	5	times

   
Complete the balance sheet: (Use a 360-day year. Do not round intermediate calculations. Input your answers in millions rounded to 2 decimal places.)

	$ in millions $ in millions Cash Current debt Accounts receivable Long-term debt Inventory Total debt Total current assets Fixed assets Equity Total assets Total debt and stockholders' equity

Answer 1

Solution:Harrelson Inc.

Sales/total assets= 2.10

Total assets= $37.80 million/2.10

Total assets= $18 million

Total debt/total assets= 30%

Total debt= $18 million * .3

Total debt= $5.4 million

Sales/inventory= 5.0x

Inventory= $37.80 million/5x

Inventory= $9.45 million

Average daily sales= $37.80 million/360 days

= $105,000 per day

Accounts receivable= 10 days * $105,000

= $1.05 million

Fixed assets= $37.80 million/5x

= $7.56 million

Current assets= Total assets – Fixed assets

= $18 million – $7.56 million

= $10.44 million

Cash= Current assets – Accounts receivable – inventory

= $10.44 million – $1.05 million – $9.45 million

= $(60,000) million

Current liabilities= Current assets/2.60x

= $10.44 million/2.60=

$4 million

Long-term debt= Total debt – current debt

= $5.4 million – $4 million

= $1.4 million

Equity= Total assets – total debt

= $18 million – $5.4million

= $12.6 million

	$ in millions		$ in millions
cash	(60,000)	Current debt	4
Accounts receivable	1.05	Long term debt	1.4
Inventory	9.45	Total debt	5.4
Total current assets	10.44
Fixed assets	7.56	Equity	12.6
Total assets	18	Total debt and stockholders' equity	18