Complete the following balance sheet for the Range Company using the following i

Question

Complete the following balance sheet for the Range Company using the following information: Debt to Assets = 60 percent Quick Ratio = 1.1 Asset Turnover = 5x Fixed Asset Turnover = 12.037x Current Ratio = 2 Average Collection Period = 16.837 days Cash Current Liabilities ____________ Receivables __________ Bonds Payable _____________ Inventory ___________ Total Liabilities _____________ Total Current Assets ___________ Net Worth _____________ Plant and Equipment ____________ Total Liabilities and Net Worth _____________ Total Assets $325,000 Assume all sales are on credit and a 360-day year.

Explanation / Answer

Debt to Asset = 60% Total Liabilities / Total Assets = 60% Total Liabilities / $325,000 = 60% Total Liabilities = $195,000 Asset Turnover = 5x Sales / Total Assets = 5x Sales / $325,000 = 5x Sales = $1,625,000 Average Collection Period = 16.837 Receivable x 365/ Sales = 16.837 Receivables x 365 / $1,625,000 = 16.837 Receivables = $76,000 Fixed Asset Turnover = 12.037x Sales / Plant and Equipment = 12.037x $1,625,000 / Plant and Equipment = 12.037x Plant and Equipment = $135,000 Current Assets = Total Assets – Plant and Equipment Current Assets = $325,000 – 135,000 Current Assets = $190,000 Current Ratio = 2 Current Assets / Current Liabilities = 2 190,000 / Current Liabilities = 2 Current Liabilities = $95,000 Bonds Payable = Total Liab. – Current Liab. Bonds Payable = $195,000 – 95,000 Bonds Payable = $100,000 Total Liabilities and Net Worth = Total Assets Total Liabilities and Net Worth = $325,000 Net Worth = Total Liab and Net Worth – Total Liab Net Worth = $325,000 – 195,000 Net Worth = $130,000 Quick Ratio = 1.1 (Cash + Receivables) / Current Liabilities = 1.1 (Cash + 76,000) / $95,000 = 1.1 Cash = 28,500 Inventory = Total Current Assets – Receivables – Cash Inventory = $190,000 – 76,000 – 28,500 Inventory = $85,500

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