Question

Complete the balance sheet and sales information using the following financial data:

Total assets turnover: 1.2×
Days sales outstanding: 36.5 days^a
Inventory turnover ratio: 5×
Fixed assets turnover: 3.0×
Current ratio: 2.0×
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 20%
^aCalculation is based on a 365-day year.

Do not round intermediate calculations. Round your answers to the nearest dollar.

Balance Sheet
Cash			Current liabilities
Accounts receivable			Long-term debt	67,500
Inventories			Common stock
Fixed assets			Retained earnings	94,500
Total assets	$270,000		Total liabilities and equity
Sales	$		Cost of goods sold	$

Answer 1

Total asset turnover = Sales / Total assets
1.2 = Sales / $270,000
Sales = $324,000

Days sales outstanding = 365 * Accounts receivable / Sales
36.5 = 365 * Accounts receivable / $324,000
Accounts receivable = $32,400

Gross profit margin = (Sales - Cost of goods sold) / Sales
0.20 = ($324,000 - Cost of goods sold) / $324,000
Cost of goods sold = $259,200

Inventory turnover ratio = Cost of goods sold / Inventories
5 = $259,200 / Inventories
Inventories = $51,840

Fixed assets turnover = Sales / Fixed assets
3.0 = $324,000 / Fixed assets
Fixed assets = $108,000

Total assets = Cash + Accounts receivable + Inventories + Fixed assets
$270,000 = Cash + $32,400 + $51,840 + $108,000
Cash = $77,760

Current assets = Cash + Accounts receivable + Inventories
Current assets = $77,760 + $32,400 + $51,840
Current assets = $162,000

Current ratio = Current assets / Current liabilities
2.0 = $162,000 / Current liabilities
Current liabilities = $81,000

Total liabilities and equity = Total assets
Total liabilities and equity = $270,000

Total liabilities and equity = Current liabilities + Long-term debt + Common stock + Retained earnings
$270,000 = $81,000 + $67,500 + Common stock + $94,500
Common stock = $27,000