Question

1. Determine the missing values based on the provided information:

• Current Ratio = 4.8571429
• Debt Ratio = 0.3306836248
• Asset Turnover = 1.3879173291
• Gross Profit Margin = 64%
• Net Profit Margin = 20%
• Inventory Turnover = 6.5475  A/R Turnover = 10.9125
• Total Assets = $629,000
• Long-term Debt = $180,000
• Common Shares = $41,000

• Cash =     
• A/R =     
• Inventory =    
• PP&E =     
• A/P =     
• R/E =     
• Sales =     
• COGS =     
• SG&A =     
• Net Income =    

Assume that there are no other asset, liability or equity accounts besides the ones listed above. Also assume 5% interest rate on long-term debt and 20% tax rate to prepare a multi-step income statement, a statement of retained earnings and a classified balance sheet.

Answer 1

asset turnover ratio = sales /total assets	1.3879173291 = total sales/629000	total sales = 1.3879173291*629000	873000
Gross profit ratio	gross profit/sales	64% = gross profit/873000	gross profit = 873000*64%	558720
cost of goods sold	sales-gross profit	873000-558720	314280
debt ratio = total of liabilities/total assets	.3306836 = total of liabilities/629000	total of liabilities = .3306836*629000	208000
total of shareholders equity = total of assets-total of liabilities	629000-208000	421000
total of current liabilities = totalof assets-total of equity-long term debt	629000-421000-180000	28000
total of current assets = current ratio*total of current liabilities	4.8571*28000	135999
Inventory = cost of goods sold/inventory turnover ratio	314280/6.5475	48000
Accounts receivables = sales/accounts receivables turnover ratio	873000/10.9125	80000
net profit = sales*net profit margin	873000*20%	174600
SG&A = gross profit-operating profit	558720-227250	331470
retained earning = total of equity-common stock	421000-41000	380000
accounts payable = total of current liabilities		28000
PP&E = total of assets-total of current liabilities	629000-135999	493001
cash = total of current assets-accounts receivables-inventory	135999-48000-80000	7999
operating profit = net income+Interest expense+tax	174600+9000+43650	227250
before tax profit = net income/(1-tax rate)	174600/(.8)	218250
Interest expense	180000*5%	9000
tax expense	before tax profit-net income	218250-174600	43650
beginning balance of retained earning	year end balance-net income	380000-174600	205400
Income statement
sales		873000
less cogs		314280
gross profit		558720
less SG&A		331470
operating profit		227250
less interest		9000
before tax profit		218250
less tax 20%		43650
net income		174600
statement of retained earning
beginning balance of retained earning		205400
net income		174600
year end balance in retained earning		380000
Balance sheet
Assets
current assets
cash	7999
accounts receivables	80000
Inventory	48000
total of current assets		135999
PP&E		493001
total of assets		629000
Liabilities and shareholders equity
current liabilities
accounts payable	28000
total of current liabilities
long term debt	180000
total of liabilities		208000
sharholders equity
common stock	41000
retained earning	380000
total of shareholders equity		421000
total of liabilites and shareholders equity		629000