Q12.

Complete the balance sheet and sales information in the

table that follows for Hoffmeister Industries using the following
financial data:

Debt ratio: 50%

Quick ratio: 0.80x
Total assets turnover: 1.5x
Days sales outstanding / average collection period: 36
days*
Gross profit margin on sales: (sales – cost of goods
sold)/sales = 25%
Inventory turnover ratio: 5x
*Calculation is based on a 360 day year.

Balance Sheet
Assets $ Liabilities & $
Equity
Cash Accounts payable
Accounts receivable Long-term debt 60,000
Inventory Common stock
Fixed assets Retained earnings 97,500
Total Assets 300,000 Total Liabilities &
Equity

Sales Cost of Goods Sold

Total Assets = Total Liabilities & Equity = 300,000
Sales = 300,000 x 1.5 = 450,000.
Sales = 100% CGS = 75% GPM = 25%
Cost of goods sold = 450,000 x .75 = 337,500
Accounts payable = ( x + 60,000) / 300,000 x 100 =
50%
X = ( 300,000 x .50 ) - 60,000 = 90,000.
Common Stock = 300,000 - 97,500 - 90,000 - 60,000
\
= 52,500.
Inventory = 337,500 / 5 = 67,500.
Account receivable turnover = 360 / 36 = 10
Accounts receivable = 450,000 / 10 = 45,000.
Total current assets except inventory = 90,000 x .8 =
139,500
Cash = 139,500 - 45,000 = 94,500.
Fixed Assets = 300,000 - 94,500 - 45,000 - 67,500
= 93,000.
Balance Sheet
Assets $ Liabilities & Equity $
Cash 94,500 Accounts payable 90,000
Accounts receivable 45,000 Long-term debt 60,000
Inventory 67,500 Common stock 52,500
Fixed assets 93,000 Retained earnings 97,500
Total Assets 300,000 Total Liabilities & Equity 300,000

Sales 450,000 Cost of Goods Sold 337,500