ABC Industries Balance sheet ending December 31, 2016

ABC Industries Balance sheet ending December 31, 2016
Assets$Liabilities & Equity$
Cash32720Accounts Payable120000
Marketable Securities25000Notes Payable 
Accounts Receivable Accruals20000
Inventories Total Current Liabilities 
Total Current Assets Long Term Debt 
Net Fixed Assets Stockholder Equity600000
Total Assets Total liabilities. & Stockholder equity 

The following financial data for 2016 is also available;
(a) Sales totalled $1,800,000.
(b) The gross profit margin was 25%.
(c) Inventory turnover was 6.0.
(d) There are 365 days in the year.
(e) The average collection period was 40 days.
(f) The current ratio was 1.60.
(g) The total asset turnover ratio was 1.20.
(h) The debt ratio was 60%.
Complete the 2016 balance sheet for ABC Industries using the given information
.

CSS Solved Business Administration Past Paper 2018 | ABC Industries Balance sheet ending December 31, 2016

The following question is attempted by Miss Nimra Masood, the top scorer in CSS Business Administration papers. Moreover, the answer is written on the same pattern, taught by Sir to his students, scoring the highest marks in compulsory subjects for years. This solved past paper question is uploaded to help aspirants understand how to crack a topic or question, how to write relevantly, what coherence is, and how to include and connect ideas, opinions, and suggestions to score the maximum.

Topic Break down

Finance is one of the pillars of business administration; therefore, CSS examiner gives 2 questions from this portion every year. Financial statements are the primary focus of financial management. Attempting financial portions always helps in impressing the Examiner; hence getting good score.

Subject: Financial Management
Chapter: Financial Statement Analysis

Assets$Liabilities & Equity$
Cash32720Accounts Payable120000
Marketable Securities25000Notes Payable159988
Accounts Receivable197260Accruals20000
Inventories225000Total Current Liabilities299988
Total Current Assets479980Long Term Debt600012
Net Fixed Assets1020020Stockholder Equity600000
Total Assets1500000Total liabilities. & Stockholder equity1500000

i) Calculating Accounts Receivable

Average Collection Period = 365/ Accounts Receivable Turnover

A/R Turnover = 365/40 = 9.125

A/R Turnover = Sales/ Accounts Receivable

Accounts Receivable = 1800000/9.125 = 197260

ii) Calculating Cost of Goods Sold

gross profit margin = gross profit/ sales

Gross Profit =  1800000 * 0.25 = 450000

Cost of Goods Sold = Sales – Gross Profit

                              = 1800000 – 450000 = 1350000

iii) Calculating Inventory

Inventory Turnover = Cost of Goods Sold/ Inventory

Inventory = 1350000/6 = 225000

iv) Calculating Total Current Assets

Current Assets = Cash + Marketable Security + A/c Receivable + Inventory

                      =   32720+ 25000+ 197260+ 225000 = 479980

v) Calculating Current Liabilities:

Current Ratio = Current Assets/ Current Liabilities

Current Liabilities = 479980/1.6 = 299988

vi) Calculating Notes Payable

Notes Payable = Current Liabilities – Accounts Payable – Accruals.

                       = 299988 – 120000 – 20000 = 159988

vii) Calculating Total Assets

Total Asset Turnover = Sales/Total Assets

Total Assets = 1800000/1.2 = 1500000

viii) Calculating Net Fixed Assets

Net Fixed Assets = Total Assets – Current Assets

                                 = 1500000 – 479980

= 1020020

ix) Calculating Long Term Debts

Debt Ratio = total debts/total assets

Total Debts= 1500000 * 0.6 = 900000

Long Term Debts = total debts – current liabilities

                                    = 900000 – 299988 = 600012

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