Question

Total asset turnover	1.5 times
Average collection period​ (assume 365-day​ year)	15 days
Fixed asset turnover	5 times
Inventory turnover​ (based on cost of goods​ sold)	3 times
Current ratio	2.0 times
Sales​ (all on​ credit)	​$4,000,000
Cost of goods sold	75% of sales
Debt ratio	40%

Fill in the assets section of the pro forma balance sheet.  ​(Round all items to the nearest​ dollar.)

Cash	​$
Accounts receivable
Inventories
Net fixed assets
Total assets	​$

Fill in the liabilities and common equity section of the pro forma balance sheet.  ​(Round all items to the nearest​ dollar.)

Current liabilities	​$
​Long-term debt
Total liabilities	​$
Common equity
Total liabilities and common equity	​

Answer 1

PARTICULARS	AMOUNT ($)
Cash	702,283
Account receivables	164,384
Inventories	1,000,000
Net fixed assets	800,000
Total assets	2,666,667
Current liabilities (A)	933,334
Long-term debt (B)	133,333
Total liabilities (A) + (B)	1,066,667
Common equity (C)	1,600,000
Total liabilities and common equity (A) + (B) + (C)	2,666,667

WORKINGS :

Sales = $4,000,000

Cost of goods sold = 75% of sales = $3,000,000

Total Assets = $2,666,667

Fixed Assets = $800,000

Inventory = $1,000,000

Account receivables = $164,384

Cash = Total Assets - Account receivables - Inventories - Fixed Assets

Cash = $2,666,667 - $164,384 - $1,000,000 - $800,000

Cash = $702,283

Total liabilities = $1,066,667

Current Liabilities = $933,334

Total liabilities = Current liabilities + Long-term debt

$1,066,667 = $933,334 + Long-term debt

Long-term debt = $133,333

Total assets = Total liabilities and common equity = $2,666,667

Total liabilities and common equity = Total liabilities + Common equity

$2,666,667 = $1,066,667 + Common equity

Common equity = $1,600,000