Question

Brenda’s Bar and Grill has total assets of $12.0 million, of which $6.0 million are current assets. Cash makes up 10 percent of the current assets and accounts receivable makes up another 40 percent of current assets. Brenda’s gross plant and equipment has a book value of $13.0 million and other long-term assets have a book value of $500,000. What is the balance of inventory and the balance of depreciation on Brenda's Bar and Grills balance sheet?

Answer 1

Current assets	$             6,000,000	Given
PPE (Net	$             5,500,000	Difference
Other long term assets	500,000	Given
Total Assets	$          12,000,000	Given
Since PPE gross	$          13,000,000
PPE net	$             5,500,000
Accumulated Depreciation	$             7,500,000
Current assets is 6 Million of which 10% is cash and 40% is Accounts Receivable
So balance 50% consists of inventory i.e. $6M x 50% = $3,000,000
Inventory	$3,000,000