Question

Problem 3-11
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: 1.5
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 30%
Total liabilities-to-assets ratio: 45%
Quick ratio: 0.85
Days sales outstanding (based on 365-day year): 29.5 days
Inventory turnover ratio: 7.0

Round your answers to the nearest whole dollar.

Partial Income	Statement Information
Sales	$
Cost of goods sold	$

Balance Sheet

Cash	$	Accounts payable	$
Accounts receivable	$	Long-term debt	$  50,000
Inventories	$	Common stock	$
Fixed assets	$	Retained earnings	$  100,000
Total assets	$  400,000	Total liabilities and equity	$

Answer 1

Partial Income	Statement Information
Sales	$600,000.00
Cost of goods sold	$420,000.00
Balance Sheet
Cash	$62,007.00	Accounts Payable	$130,000.00
Accounts Receivable	$48,493.00	Long term debt	$50,000.00
Inventories	$60,000.00	Common stock	$120,000.00
Fixed Assets (balancing figure)	$229,500.00	Retained earnings (balancing figure)	$100,000.00
Total Assets	$400,000.00	Total Liabilities and Equity	$400,000.00
Working
Total Assets turnover = Sales / Total assets = 1.5
Hence , Sales = Total assets x 1.5 = $400000 x 1.5 = $6,00,000
Cost of goods sold = Sales x (1 - gross profit margin %) = $600000 x 70% = $4,20,000
Total liabilities to assets = Total liabilities / Total assets = 45%
Hence , Total liabilities = Total Assets x 45% = $400000 x 45% = $1,80,000
Accounts Payable = Total Liabilities - Long term debt = $180000 - $50000 = $1,30,000
Inventory Turnover ratio = Cost of goods sold / Inventory = 7
Hence , Inventory = Cost of goods sold / 7 = $420000 / 7 = $60,000
Days sales outstanding = [Accounts Receivable / Sales] x 365 days
29.5 days = [Accounts receivable / $600000] x 365 days
0.080822 = Accounts receivable / $600000
Accounts Receivable = $48,493
Quick ratio = [Cash + Accounts receivable] / Accounts Payable
0.85 = [Cash + $48,493] / $1,30,000
$1,10,500 = Cash + $48,493
Cash = $62,007