USE THE DATA BELOW TO ANSWER QUESTIONS 29, 30 AND 31 - THE DATA WILL BE REPEATED
ID: 2766069 • Letter: U
Question
USE THE DATA BELOW TO ANSWER QUESTIONS 29, 30 AND 31 - THE DATA WILL BE REPEATED FOR EACH OF THE QUESTIONS, BUT IT IS IDENTICAL FOR EACH. Given the financial data and ratios listed below for the Atlanta Company, determine what Atlanta Company recorded as Net Fixed Assets on its 2012 balance sheet. (Record your answer without a dollar sign, without commas, and if the answer is a negative number, use the minus sign followed by the number with no spaces between the minus sign and the number - thus record $3,843 as 3843 or negative 18 as -18).Explanation / Answer
1. Calculation of Accounts Receivable = Credit sales x Collection Period = 10,000 x 80% x 45/360 = 1,000
2. Calculation of Inventory = Inventory turnover ratio = Cost of goods sold/Average inventory
Cost of goods sold = Total sles - Gross profit = 10,000 - 40% = 6,000
6,000/Average Inventory = 4 times = Average Inventory = 6,000/4 = 1500; In the absence of information of
Opening Stock and Closing stock, Average inventory is presumed as closing invenory; Hence, closing inventory is
1500.
3. Calculation of Total assets : Return on Assets = 20% = Return / Assets
= 8% of 10,000/Assets = 20%
= 800/Assets = 20%
Assets = 800/20%
Assets = 4,000;
Hence, Total assets = 4,000;
4. Since,Total assets are 4,000, Net fixed assets = Total asset - Cash - Accounts receivable - Inventory
Net Fixed assets = 4,000 - 250 - 1,000 - 1,500 = 1,250.
Hence, Net Fixed assets = 1250
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