assignment

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Kisi ne kia isko??

aaj dekhungi isko 

kisi nay isay solve kiya ha??

we are required to calculate the missing values (e.g. Cash, accounts receivable, Inventory, Plant and Equipment, total assets, long-term debt and total liabilities and shareholder’s equity) by using rations which are given in the assignment and show complete balance sheet of “Fahad Stiching Unit”.

how?

Has anyone solved this yet, could he/she be kind enough to share the solution plz ... ?

Answer Part 1:

Fahad stitching unit

Balance sheet

As on 31st December 2014

Assets
Rs.
Liabilities and Owner's Equity
Rs.
Cash(W-5)
50,000
Notes and Payables
100,000
Accounts Receivable(W-4)
50,000
Long term debt (W-1)
100,000
Inventory(W-3)
100,000
Common Stock
100,000
Plant and Equipment(Balance Figure)
200,000
Retained Earnings
100,000
Total Assets(W-2)
400,000
Total Liabilities and shareholder's Equity(W-2)
400,000

Workings:

W-1:

Long-term debt/ Equity = 0.5
Long-term debt/200,000=0.5
Long-term debt = 100,000

W-2:
Now,
Total liabilities and shareholders' equity = 400,000

So, Total assets = 400,000

W-3:
Assets turnover ratio is:

Sales/ Total assets = 2.5
Sales/400,000=2.5
Sales = 1,000,000
Since Gross Profit Margin is 10%
So,
CGS=90% of sales
=900,000
Now, Inventory turnover ratio is

Cost of goods sold/ Inventory = 9
900,000/Inventory =9
900,000/9= Inventory
100,000= Inventory
W-4:
Average Collection period is:

Accounts Receivable x 360 days/Sales = 18 days
Accounts Receivable x 360 days/100,000 = 18 days
Accounts Receivable = 50,000

W-5:
Acid test Ratio is:
Cash + 50,000/100,000 = 1
Cash +50,000=100,000
Cash =50,000

Thanks a lot Seemna

Thanks Seema,,,This helped a lot,,Jazaq Allah

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