Question

Given the following information, complete the amounts in the balance sheet entries shown below. Collection period 71 Days Days sales in cash 34 Days Current ratio 2.6 Inventory turnover 5 time Liabilities to assets 75% Payables period 36 days (All sales are on credit. All calculations assume a 365-day year. Payables period is based on cost of goods sold.) Assets Current assets Cash $1,100,00 Accounts receivable Inventory 1,900,000 Total current assets Net fixed assets Total assets 8,000,000 Liabilities and shareholders equity Current liabilities: Accounts payable Short-term debt Total current liabilities Long-term debt Shareholders equity Total liabilities and equity

Answer 1

To calculate the merchandise balance, divide the cost of goods sold by the inventory turnover ratio. To find the current account balance, calculate the current liabilities using the payables period formula. Use the given information and formulas to complete the balance sheet entries.

Step-by-step explanation:

To calculate the merchandise balance, we need to calculate the cost of goods sold (COGS) and the ending inventory. Given the inventory turnover ratio of 5 times, we can divide the cost of goods sold by 5 to get the average inventory. Using the formula: COGS = Accounts receivable / Days sales in cash, we can calculate the COGS as Accounts receivable / 34. Then, the ending inventory can be calculated as Average inventory / Inventory turnover ratio.

To find the current account balance, we need to calculate the current liabilities. The payables period is given as 36 days, which is based on the cost of goods sold. The payables period is calculated as the Accounts payable / COGS * 365. Therefore, the Accounts payable can be calculated as COGS / 365 * Payables period.

Using the given information and the formulas above, we can complete the amounts in the balance sheet entries.

Answer 2

1. The accounts receivable is $2,297,078
2. The net fixed assets is $2,702,941
3. The accounts payable is $936,986
4. The short-term debt is $1,100,344
5. The long- term debt is $3,962,670
6. The shareholders equity is $2,000,000.

Sales = Cash / Days sales in cash * 365

= ($1,100,000/34 days) * 35

= $11,808,924

Account receivables = (Collection period * Sales) / 365

= (71 * $11808924)/ 365

= 2,297,078.36712

= 2,297,078

Cost of goods sold = Inventory turnover * Ending inventory

= 5 * 1,900,000

= $9,500,000

Account payable = Payable period + (COGS / 365)

= 36 * ($9,500,000/365)

= 936,986.30

Total liabilities = Total assets value * The liabilities to assets ratio

= 8,000,000 * 75%

= 600,0000

Shareholder equity = Assets value - Liabilities value

= $8,000,000 - $600,0000

= $2,000,000

Current liabilities = Current assets value / Current ratio

= 5297059 / 2.6

= $2,037,330.38

Note: The Full question is attached below.