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In: Accounting

Mayfield Company has the following information available: Accounts payable $108,000 Intangible assets $180,000 Accounts receivable 90,000...

Mayfield Company has the following information available:

Accounts payable	$108,000	Intangible assets	$180,000
Accounts receivable	90,000	Inventory	210,000
Accumulated depreciation	150,000	Mortgage payable	330,000
Cash	60,000	Retained earnings	?
Common stock	192,000	Salaries payable	42,000
Equipment	420,000	Supplies	30,000

Compute each of the following, showing calculations for partial credit.

1. Total current assets

2. Total noncurrent (long-term) assets

3. Total current liabilities

4. Retained earnings amount

5. Current ratio

6. Debt to total assets ratio

Solutions

Expert Solution

1) Calculate the Total Current Assets :

Here, Total Current assets = Cash + Accounts Receivable + Inventory + Supplies

Total Current assets = $ 60,000 +$ 90,000 +$ 210,000 +$ 30,000

Total Current assets = $ 390,000

2) Calculate the Total Noncurrent (Long term ) Assets :

Here , Total Noncurrent (Long term ) Assets = Equipment - Accumulated Depreciation + Intangible Assets

Total Noncurrent (Long term ) Assets = $ 420,000 - $ 150,000 + $ 180,000

Total Noncurrent (Long term ) Assets = $ 450,000

3) Calculate the Total Current Liabilities :

Here, it is assumed that Mortgage payable due More than 1 Year, So, Assumed Mortgage payable is treated as Long term Liabilities

Here, Total Current Liabilities = Accounts Payable + Salaries Payable

Total Current Liabilities = $ 108,000 + $ 42,000

Total Current Liabilities = $ 150,000

4) Calculate the Retained Earnings amount

Assets = Total Liabilities + Stockholders' Equity

(Total Current assets + Total NonCurrent (Long term ) Assets )= (Total Current liabilities + Mortgage Payable ) + (Common Stock + Retained Earnings )

$ 390,000 + $ 450,000 = $ 150,000 + $ 330,000 +$ 192,000 + Retained earnings

$ 840,000 = $ 672,000 + Retained Earnings

Retained Earnings= $ 840,000 - $ 672,000

Retained Earnings= $ 168,000

5) Calculate the Current Ratio :

Current ratio = Total Current Assets / Total Current Liabilities

Current ratio = $ 390,000 / $ 150,000

Current ratio = $ 2.6

6) Calculate the Debt to Total Assets ratio :

Debt to Total Assets ratio = Total Liabilities / Total Assets

Here, Total Liabilities = Total Current liabilities + Mortgage Payable

Total Liabilities = $ 150,000 + $ 330,000

Total Liabilities = $ 480,000

Here, Total Assets = Total Current Assets + Total Noncurrent (Long Term ) Assets

Total Assets = $ 390,000 + $ 450,000

Total Assets = $ 840,000

Debt to Total Assets ratio = Total Liabilities / Total Assets

Debt to Total Assets ratio = $ 480,000 / $ 840,000

Debt to Total Assets ratio = 57.14 % (Rounded to 2 decimal )

ekkarill92 answered 1 year ago

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