IV. Complete the balance sheet and sales information presented below for Sean Do

Question

IV. Complete the balance sheet and sales information presented below for Sean Dominic Co below mpany, using the following ratios Cash Accounts Receivable Inventories Accounts Payable Long-term debt 60,000 Total Liabilities Capital Stock Retained Earnings Total Current Assets Net Fixed Assets 97,500 Total Assets P 300,000 Total Liabilities and Stockholder's Equity Cost of Goods Sold Sales Financial data for 2017: 2. 3. 4. 5· 6, 7. Total debts to total assets ratio was 50% Quick ratio was 0.80 Total asset turnover 1.5x There are 360 days in a year The average collection period was 36 days Gross profit margin was 25% Inventory turnover was 5x (use COGS instead of sales)

Explanation / Answer

1 Total Debt to total assets ratio 50% Total Assets              300,000 Total Debt (Total Assets x debt to asset ratio)              150,000 2 Quick ratio 0.8 Total Liabilities (as calculated above) 150000 Long term debt 60000 Accounts payable 90000 Quick ratio = quick assets/current liabilities Quick assets = Current liabilities x quick ratio Quick assets (Cash + Accounts receivable) 72000 3 Total asset turnover 1.5 Total assets 300000 Total sales (Total assets x total asset turnover) 450000 4 Gross Profit Margin 25% COGS 75% Sales 450000 COGS 337500 5 Inventory turnover 5 COGS 337500 Inventory (COGS x Inventory turnover) 67500 6 Days in a year 360 Average collection period 36 Receivable turnover (Days in year/average collection period) 10 Sales 450000 Accounts receivable (sales/receivable turnover) 45000 7 Quick Assets 72000 Accounts receivable 45000 Cash (Quick assets - accounts receivable) 27000 Balance Sheet Cash 27000 Accounts Payable 90000 Accounts receivable 45000 Long term debt 60000 Inventory 67500 Total liabilities 150000 Current Assets 139500 Capital Stock (Balancing figure) 52500 Net Fixed Assets (balancing figure) 160500 Retained Earnings 97500 Total Assets 300000 Total liabilities and Stockholder's equity 300000 Sales 450000 COGS 337500

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