Question

Problem 3-35 Using ratios to construct financial statements [LO3-2] The following information is from Harrelson Inc.'s, financial statements. Sales (all credit) were $30.60 million for last year Sales to total assets Total debt to total assets Current ratio Inventory turnover Average collection period Fixed asset turnover 1.80 times 40 % 2.40 times 6 times 19 days 5 times Complete the balance sheet: (Use a 360-day year. Do not round intermediate calculations. Input your answers in millions rounded to 2 decimal places.) Answer is complete but not entirely correct S in millions $ in millions $4.16Current debt Cash Accounts receivable Inventory 1.62クLong-term debt 5.10Total debt 4.53 2.27ク 6.80ク Total current assets Fixed assets $10.88 1Equity 0.20 4.16 17.00 о Total debt and stockholders UI Total assets

Answer 1

Ans.	ASSETS	in millions	LIABILITIES	in millions
	Cash	4.16	Current debt	4.53
	Accounts receivables	1.62	Long - term debt	2.27
	Inventory	5.1	Total debt	6.8
	Total current assets	10.88
	Fixed assets	6.12	Equity	10.2
	Total assets	17	Total debt and stockholders' equity	17
	*Calculations:
1	Sales to Total assets =   Sales / Total assets
	1.80   =   30.60 / Total assets
	Total assets =   30.60 / 1.80
	17
2	Total debt to Total assets = Total debt / Total assets
	0.40   =    Total debt / 17
	Total debt   =   17 * 0.40
	6.8
3	Fixed assets turnover =   Sales / Fixed assets
	5   =   30.60 / Fixed assets
	Fixed assets =   30.60 / 5
	6.12
4	Current assets = Total assets - Fixed assets
	17 - 6.12
	10.88
5	Current ratio = Current assets / Current liabilities
	2.40 = 10.88 / Current liabilities
	Current liabilities =   10.88 / 2.40
	4.53
6	Total debt = Current liabilities + Long term debt
	6.8 = 4.53 + Long term debt
	Long term debt = 6.8 - 4.53
	2.27
7	Inventory turnover = Sales / Inventory
	6 = 30.60 / inventory
	Inventory = 30.60 / 6
	5.1
8	Average collection period = No. of days in year / Receivables turnover
	19 =   360 / Receivables turnover
	Receivables turnover = 360 / 19
	18.947
	Receivables turnover = Sales / Receivables
	18.95 = 30.60 / Receivables
	Receivables   =   30.60 / 18.947
	1.62
9	Current assets = Inventory + Receivables + Cash
	10.88 = 5.1 + 1.62 + Cash
	Cash = 10.88 - 5.1 - 1.62
	4.16
10	Total debt and stockholder's equity = Total debt + Equity
	17 =   6.80 + Equity
	Equity = 17 - 6.80
	Equity   = 10.20
	*Total debt and stockholder's equity = Total assets