1) Complete the balance sheet and sales data (fill in the blanks), using the fol
ID: 2813525 • Letter: 1
Question
1) Complete the balance sheet and sales data (fill in the blanks), using the following financial data: Debt/net worth Acid test ratio Asset turnover Day sales outstanding in accounts receivable Gross profit margin Inventory turnover 60% 1.2 1.5 times 40 days 30% 6 times Balance sheet Cash Accounts receivable Inventories Plant & equipment (8 marks) (8 marks) (8 marks) (8 marks) Accounts payable Common stock RM15,000 Retained earnings RM22,000 (8 marks) Total assets (8 marks) Total labilities & capital (8 marks) Sales Cost of goods sold (8 marks) (8 marks)Explanation / Answer
Balance Sheet
Cash
RM 16,908.49
Accounts Payable
RM 22,200
Account receivable
RM 9,731.51
Common Stock
RM 15,000
Inventories
RM 10,360
Retained Earnings
RM 22,000
Plant & equipment
RM 22,200
Total assets
RM 59,200
Total liabilities & Capital
RM 59,200
Sales
RM 88,800
Cost of goods sold
RM 62,160
Explanation:
Net worth = Common stock + Retained earnings
Net worth = Total assets - Total liabilities
RM 15,000 + RM 22,000 = Total assets - Total liabilities
RM 37,000 = Total assets - Total liabilities
Debt/ Net worth = 60 %
Debt/ RM 37,000 = 0.60
Debt = RM 37,000 x 0.60 = RM 22,200
Accounts payable = RM 22,200
Total liabilities & capital = Accounts payable + Common stock + Retained earnings
= $ RM 22,200 + RM 15,000 + RM 22,000 = RM 59,200
Total assets = Total liabilities + Capital
Total assets = RM 59,200
Asset turnover = 1.5 times
Net sales / Total assets = 1.5 times
Net sales / RM 59,200 = 1.5
Net sales = RM 59,200 x 1.5
Net sales = RM 88,800
Gross profit margin = 30 %
Sales – COGS/sales = 0.3
(RM 88,800 – COGS)/ RM 88,800 = 0.3
RM 88,800 – COGS = RM 88,800 x 0.3
RM 88,800 – COGS = RM 26,640
COGS = RM 88,800 – RM 26,640
COGS = RM 62,160
Acid-Test Ratio = (Current assets – Inventory) / Current Liabilities
1.2 = (Current assets – Inventory)/ RM 22,200
(Current assets – Inventory) = RM 22,200 x 1.2
= RM 26,640
Inventory turnover ratio = COGS/Inventory
6 = RM 62,160/ Inventory
Inventory = RM 62,160/6 = RM 10,360
Current assets - RM 10,360 = RM 26,640
Current assets = RM 10,360 + RM 26,640
Current assets = RM 37,000
DSO = Account receivable/ (Annual sales /365)
40 days = Account receivable/ (RM 88,800/365)
= Account receivable/ RM 243.2876712
Account receivable = RM 243.2876712 x 40 = RM 9,731.51
Cash = RM 37,000 - RM 10,360 - RM 9,731.51
Cash = RM 16,908.49
Plant & equipment = Total assets – Current assets
= RM 59,200 - RM 37,000 = RM 22,200
Balance Sheet
Cash
RM 16,908.49
Accounts Payable
RM 22,200
Account receivable
RM 9,731.51
Common Stock
RM 15,000
Inventories
RM 10,360
Retained Earnings
RM 22,000
Plant & equipment
RM 22,200
Total assets
RM 59,200
Total liabilities & Capital
RM 59,200
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