Question

Complete the balance sheet and sales information in the table for Esther Industries using the following financial data.

Total Assets Turnover: 3.5

Gross profit margin on sales: = 30%

Debt ratio: 40%​

Quick ratio: 0.85

Days sales outstanding (based on 365-day year): 15 days

Inventory turnover ratio: 6

Partial Income Statement Information

Sales                                    _______

Cost of goods sold $12,801,250

Balance Sheet

Cash                                    _______       Accounts payable $2,446,250

Accounts receivable       _______       Long-term debt    ________

Inventories _______    Common stock $641,250

Fixed assets       _______                     Retained earnings ________

Total assets    _______ Total liabilities and equity       ______

Answer 1

gross profit margin=sales-cost of goods sold/sales

30%=x-12,801,250/x

x(sales)=18,287,500

Sales/ total assets =turnover ratio

18,287,500/x=3.5

x(total assets)=18,287,500/3.5=52,25,000

Total liabilities = 40%*total assets = 40%*52,25,000 =20,90,000

So longterm debt= 20,90,000-Accounts payable = 20,90,000-24,46,250 =( 3,56,250)

Accounts receivable = 15/365*sales = 15/365*18,287,500 = 7,51,541

Inventory = COGS/turnover ratio = 12,801,250/6= 21,33,542

Let cash be X. Then quick ratio = (cash+accounts receivable)/current liabilities = (X+21,33,542)/24,46,250= 0.85, i.e X = 54,230. So cash is 54,230

Current assets = cash+accounts receivable+inventory = 54,230+ 21,33,542+7,51,541= 29,39,313

Fixed asset = total asset - current asset = 52,25,000-29,39,313 = 22,85,687

Common stock = (total liabilties and equity) - retained earnings - total liabilities

6,41,250=52,25,000-x-20,90,000

Retained earnings=24,93,750

So final values are:

Sales: 18,287,500

Cash: 54,230

Accounts receivable: 21,33,542

Inventory: 7,51,541

Fixed assets: 22,85,687

Total assets: 52,25,000

Accounts payable: 24,46,250

Long term debt: (3,56,250)

Common stock: 6,41,,250

Retained earnings:24,93,750

Total liabilities and equity:52,25,000

note:

IN question accounts payable given is more when compared to Total liabilites actually this is assume typing mistake of entering amount of acounts payable for Balance sheet Total Assets=Total Liabilites&equity For this we cosidered negitive figure of long term liabilities in practical it is not negitive amount