In: Accounting
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 ______
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