Complete the balance sheet and sales information in the table that follows for J
ID: 2701453 • Letter: C
Question
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 %u2013 Cost of goods sold)/Sales = 25%
Total liabilities-to-assets ratio: 40%
Quick ratio: 0.80
Days sales outstanding (based on 365-day year): 36.5 days
Inventory turnover ratio: 3.75
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 ______
Explanation / Answer
Sales = total assets * turnover ratio = 400,000*1.5 = 600,000
Gross profit margin = 25%*sales = 25%*600,000 = 150,000
So COGS = 600,000-150,000 = 450,000
Total liabilities = 40%*total assets = 40%*400,000 = 160,000
So current liabilities = 160,000-long term debt = 160,000-50,000 = 110,000
Accounts receivable = 36.5/365*sales = 36.5/365*600,000 = 60,000
Inventory = COGS/turnover ratio = 450,000/3.75 = 120,000
Let cash be X. Then quick ratio = (cash+accounts receivable)/current liabilities = (X+60,000)/110,000 = 0.8, i.e X = 28,000. So cash is 28,000
Current assets = cash+accounts receivable+inventory = 28000+60000+120000 = 208,000
Fixed asset = total asset - current asset = 400,000-208,000 = 192,000
Common stock = (total liabilties and equity) - retained earnings - total liabilities = 400,000-100,000-160,000 = 140,000
So final values are:
Sales: 600,000
Cost of Goods Sold: 450,000
Cash: 28,000
Accounts receivable: 60,000
Inventory: 120,000
Fixed assets: 192,000
Total assets: 400,000
Accounts payable: 110,000
Long term debt: 50,000
Common stock: 140,000
Retained earnings: 100,000
Total liabilities and equity: 400,000
Hope this helped ! Let me know in case of queries.
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