Question 2 (20 marks) 54 minutes Shake Industries Balance Sheet 31, December 201

Question

Question 2 (20 marks) 54 minutes Shake Industries Balance Sheet 31, December 2017 Assets Liabilities and Stockholders' Equity Cash . $32 720 Accounts Payable $120 000 Marketable Security $25 000 Notes Payable Accounts receivable Accruals $20 000 Inventories Pokemon Total Current liabilities where Total current assets a X Long term debts Store Net fixed assets Stockholders' equity $600 000 Total assets Total Liabilities and Equity Gan protte sure to wo The following financial data for 2015 are also available: co Cuint Kaho. 1. Sales totaled $ 1 800 000. A 2. The gross profit margin was 25%. 3. Inventory turnover was 6.0. A 4. There are 365 days in the year. 5. The average collection period was(40 day 6. The current ratio was 1.60. 7. The total asset-turnover ratio was 1.20 8. The debt ratio was 60% SAL ICBJA 1.60 Use the available information to complete the balance sheet missing figures. costs 2880 do

Explanation / Answer

1.

Sales = $1800000

Total assets turnover ratio = Net sales / Average total assts

1.20 = 1800000 / Total assets

Total assets = 1500000

2.

Gross profit margin = 25%

Gross profit = Sales * 25% = 1800000 * 0.25 = 450000

Cost of goods sold = Sales - gross profit

= 1800000 - 450000 = 1350000

3.

Inventory turnover ratio = Cost of goods sold / Average inventory

6 = 1350000 / Inventory

Inventory = 1350000 / 6 = 225000

4.

Average collection period = Accounts receivable / (Net sales / 365)

40 = Accounts receivable / (1800000 / 365)

Accounts receivable = 197260

5.

Current ratio = current assets / Current liablities

1.6 = 479980 / Current liabilities

Current liabilities = 299988

6.

Current liabilities = Accounts payable + Notes payable + Accruals

299988 = 120000 + 159988 + Notes payable + 20000

Notes payable = 159988

7.

Debt ratio = Total liability / Total assets

60% = Total liablity / 1500000

Total liablility = 900000

8. Long term liab = 900000 - 299988 = 600012

Assets Liabilities and stockholder'equity Cash 32720 Accounts payable 120000 Marketable secutiry 25000 Notes payable 159988 Accounts receivable 197260 Accruals 20000 Inventories 225000 Total current liabilities 299988 Total current assets 479980 Long term debts 600012 Net fixed assets 1020020 Stockholder'Equity 600000 Total assets 1500000 Total liabilities and Equity 1500000

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