Question

Complete the balance sheet and sales information using the following financial data:

Total assets turnover: 1.1x
Days sales outstanding: 34.5 days^a
Inventory turnover ratio: 3x
Fixed assets turnover: 3x
Current ratio: 2.2x
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 35%
^aCalculation is based on a 365-day year. Do not round intermediate calculations. Round your answer to the nearest cent.

Balance Sheet
Cash	$		Current liabilities	$
Accounts receivable			Long-term debt	80,000
Inventories			Common stock
Fixed assets			Retained earnings	100,000
Total assets	$400,000		Total liabilities and equity	$
Sales	$		Cost of goods sold	$

Answer 1

Sol :

Cash	$116,410.96	Current liabilities	$115,151.51
Accounts receivable	$41,589.04	Long-term debt	$80,000.00
Inventories	$95,333.33	Common stock	$104,848.49
Fixed assets	$146,666.67	Retained earnings	$100,000.00
Total assets	$400,000.00	Total liabilities and equity	$400,000.00
Sales	$440,000.00	Cost of goods sold	$286,000.00

Given Total assets = $400,000, Long term debt = $80,000 and Retined earnings = $100,000

Now Total assets turnover: 1.1 = Sales/Total assets = 1.1

Sales = Total assets x 1.1

Sales = $400,000 x 1.1 = $440,000

Now cost of good sold = Sales x (1-35%)

Cost of good sold = $440,000 x (1-0.35) = $286,000

Inventory = Cost of goods sold/Inventory Turnover Ratio

Inventory = $286,000/3 = $95,333.33

Accounts receivables = Sales x Days sales outstanding/365

Accounts receivables = $440,000 x 34.5/365 = $41,589.04

Fixed assets = Sales/Fixed assets turnover ratio

Fixed assets = $440,000/3 = $146,666.67

Cash = Total assets - Fixed assets - Inventory - Accounts receivables

Cash = $400,000 - $146,666.67 - $95,333.33 - $41,589.04 = $116,410.96

Total liabilities and equity = $400,000

Current liabilities = Current assets/Current ratio

Current liabilities = $116,410.96 + $41,589.04 + $95,333.33 / 2.2

Current liabilities = $253,333.33/2.2 = $115,151.51

Common Stock = Total liabilities and equity - Current liabilities - Long term debt - retained earnings

Common Stock = $400,000 - $115,151.51 - $80,000 - $100,000 = $104,848.49