Question

Complete the balance sheet and sales information in the table that follows for Mendy Industries using the following financial data:

Total assets turnover: 2
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 21%
Total liabilities-to-assets ratio: 45%
Quick ratio: 1.15
Days sales outstanding (based on 365-day year): 31.5 days
Inventory turnover ratio: 6.0

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

Partial Income	Statement Information
Sales	$
Cost of goods sold	$

Balance Sheet

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

Total asset turnover = 2

Sales / Total assets = 2

Sales = Total assets * 2

= $400,000 * 2

= $800,000

(Sales - Cost of goods sold) / Sales = 21%

($800,000 - Cost of goods sold) / $800,000 = 0.21

$800,000 - Cost of goods sold = $168,000

Cost of goods sold = $800,000 - $168,000

= $632,000

Total liabilities to assets ratio = 45%

Total liabilities / Total assets = 0.45

Total liabilities / $400,000 = 0.45

Total liabilities = 0.45 * $400,000

= $180,000

Accounts payable = Total liabilities - Long term debt

= $180,000 - $50,000

= $130,000

Inventory turnover = 6

Cost of goods sold / Inventory = 6

$632,000 / Inventory = 6

Inventory = $632,000 / 6

= $105,333

Days sales outstanding = 365 / Accounts receivable turnover

31.5 = 365 / Accounts receivable turnover

Accounts receivable turnover = 365 / 31.5

= 11.59

Sales / Accounts receivable = 11.59

$800,000 / Accounts receivable = 11.59

Accounts receivable = $800,000 / 11.59

= $69,025

Quick ratio = 1.15

(Cash + Accounts receivable) / Current liabilities = 1.15

(Cash + $69,015) / $130,000 = 1.15

Cash = $80,485

Partial Income	Statement Information
Sales	$800,000
Cost of goods sold	$632,000

Balance Sheet

Cash	$80,485	Accounts payable	$130,000
Accounts receivable	$69,025	Long term debt	$50,000
Inventories	$105,333	Common stock	$120,000 (plug)
Fixed assets	$145,157	Retained earnings	$100,000
Total assets	$400,000	Total liabilities and equity	$400,000