Question

In: Accounting

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

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       ______

Solutions

Expert Solution

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


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