Question

Balance Sheet Analysis

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

Total assets turnover: 1.3
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 30%
Total liabilities-to-assets ratio: 50%
Quick ratio: 1.20
Days' sales outstanding (based on 365-day year): 36.5 days
Inventory turnover ratio: 3.50

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

Sales: 520,000

Cost of Goods sold: 364,000

Cash:

Accounts Receivable: 520,000

Inventories:

Fixed Assets:

Total Assets: $400,000

Accounts Payable:

Long-term debt: 50,000

Common Stock:

Retained Earnings: 100,000

Total Liabilities & Equity:

Answer 1

PARTICULARS	AMOUNT ($)	Working Note No.
Cash:	128,000	5
Accounts Receivable:	52,000	**Note
Inventories:	104,000	4
Fixed Assets:	116,000	6
Total Assets:	400,000	Given in Ques.
Accounts Payable:	150,000	1
Long-term debt:	50,000	Given in Ques.
Common Stock:	100,000	3
Retained Earnings:	100,000	Given in Ques.
Total Liabilities & Equity:	400,000	2

Working Notes:

1. Calculation Of Accounts Payable:

Total Liabilities-to-Assets Ratio = 50%

We know that,

here in the given scenario, [ Total Outside Liabilities = Long Term Debt + Accounts Payable]

Therefore, Accounts Payable = $150,000

2.Calculation Of Total Liabilities & Equity:

In Balance sheet ,

Total Assets = Total Liabilities & Equity

Therefore Total Liabilities & Equity = $ 400,000

3.Calculation Of Common Stock:

Total Liabilities & Equity = Common Stock + Retained Earnings + Long-term debt + Accounts Payable

400,000 = Common Stock + 100,000 + 50,000 + 150,000

Therefore Common Stock = $ 100,000

4.Calculation Of Inventories:

Inventory Turnover Ratio = 3.5

We know that,

Therefore,  Inventories = $ 104,000

5.Calculation Of Cash:

Quick ratio = 1.20

We Know that,

[Here in the given scenario,

Liquid Assets = Cash + Accounts Receivables

Current Liabilities = Accounts Payable]

Therefore, Cash = $ 128,000

6.Calculation Of Fixed Assets:

Total Assets = Fixed Assets + Inventories + Cash + Accounts Receivables

(from above working notes and as given in ques)

400,000 = Fixed Assets + 104,000 + 128,000 + 52,000

Fixed Assets = 400,000 - 284,000

Therefore, Fixed Assets = $ 116,000

***NOTE: In the Question, The Figure Of Accounts receivables is mistakenly qouted as $520,000 in place of $52,000 as the Total Assets itself are $400,000.

Also, If we Calculate it using the Days Sales Outstanding, it will come out to $52,000 as below,

Therefore, Accounts Receivables = $ 52,000