EXERCISE 1–1 Assume you are an analyst evaluating Mesco Company. The following data are available in your financial analysis (unless otherwise indicated, all data are as of December 31, Year 5):

Retained earnings, December 31, Year 4 . . . . . $98,000 Gross profit margin ratio . . . . . . . . . . . . . . . . . 25%

Acid-test ratio . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 to 1 Noncurrent assets . . . . . . . . . . . . . . . . . . . . . . $280,000 Days’ sales in inventory . . . . . . . . . . . . . . . . . . 45 days Days’ sales in receivables . . . . . . . . . . . . 18 days Shareholders’ equity to total debt . . . . . . 4 to 1 Sales (all on credit) . . . . . . . . . . . . . . . . . $920,000 Common stock: $15 par value; 10,000 shares issued and outstanding; issued at $21 per share Required:
Using these data, construct the December 31, Year 5, balance sheet for your analysis. Operating expenses (excluding taxes and cost of goods sold for Year 5) are $180,000. The tax rate is 40%.
Assume a 360-day year in ratio computations. No cash dividends are paid in either Year 4 or Year 5. Current assets consist of cash, accounts receivable, and inventories.