Question

Please explain and show work:

3-11 Complete the balance sheet and sales information in the table that follows for J. White Balance Sheet Total assets turnover: 1.5 Gross profit margin on sales: Sales 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

Statement Information Partial Income Sales Cost of goods sold Balance Sheet Information 50,000 Balance Sheet Cash Accounts receivable Inventories Fixed assets Total assets Accounts payable Long-term debt Common stock Retained earnings Total liabilities and equity 100,000 $400,000

Answer 1

Ans.	J. WHITE
	Partial Income Statement
	Particulars	Amount
	Sales	$600,000
	Cost of goods sold	$450,000
	Gross margin	$150,000
Ans.	J. WHITE
	Balance Sheet
	ASSETS	Amount	LIABILITIES & EQUITY	Amount
	Cash	$28,000	Accounts payable	$110,000
	Accounts receivables	$60,000	long term debt	$50,000
	Inventory	$120,000	Total debt (a)	$160,000
	Total current assets (a)	$208,000	Common stock	$140,000
			Retained earnings	$100,000
	Net fixed assets (b)	$192,000	Total Equity (b)	$240,000
	Total assets (a+b)	$400,000	Total Liabilities and Equity (a+b)	$400,000
	Calculations;
	Total assets turnover   =   Sales / Total assets
	1.5   =   Sales / $400,000
	Sales = $400,000 * 1.5
	Sales = $600,000
	Gross margin = Sales * Gross margin percentage
	$600,000 * 25%
	$150,000
	Cost of goods sold =   Sales - Gross margin
	$600,000 - $150,000
	$450,000
	Inventory turnover = Cost of goods sold / Inventory
	3.75 = $450,000 / Inventory
	Inventory =   $450,000 / 3.75
	$120,000
	Days sales outstanding   =   Accounts receivables / Sales * No. of days in year
	36.5 days   =   Accounts receivables / $600,000 * 365 days
	Accounts receivables =   $600,000 * 36.5 / 365
	Accounts receivables =   $60,000
	Total liabilities to assets ratio   =   Total liabilities / Total assets
	40% = Total liabilities / $400,000
	Total liabilities =   $400,000 * 40%
	Total liabilities =   $160,000
	Accounts payable =   Total liabilities - long term debt
	$160,000 - $50,000
	$110,000
	*Accounts payable is the only current liability here.
	Quick ratio   =   (Total currrent assets - Inventory) / Current liabilities
	0.80   =   (Total current assets - $120,000) / $110,000
	0.80 * $110,000 =   Total current assets - $120,000
	$88,000 =   Total current assets - $120,000
	Total current assets =   $88,000 + $120,000
	Total current assets =   $208,000
	Cash   =   Total current assets - Inventory - Accounts receivables
	$208,000 - $120,000 - $60,000
	$28,000
	Net fixed assets = Total assets - Current assets
	$400,000 - $208,000
	$192,000
	*Common stock = Total assets - Total liabilities - Retained earnings
	$400,000 - $160,000 - $100,000
	$140,000