Question

In: Finance

BALANCE SHEET The assets of Dallas & Associates consist entirely of current assets and net plant...

BALANCE SHEET

The assets of Dallas & Associates consist entirely of current assets and net plant and equipment. The firm has total assets of $2.9 million and net plant and equipment equals $2.6 million. It has notes payable of $155,000, long-term debt of $747,000, and total common equity of $1.55 million. The firm does have accounts payable and accruals on its balance sheet. The firm only finances with debt and common equity, so it has no preferred stock on its balance sheet.

Write out your answers completely. For example, 25 million should be entered as 25,000,000. Enter negative amounts, if any, with a minus sign.

What is the company's total debt?
  $

What is the amount of total liabilities and equity that appears on the firm's balance sheet?
$  

What is the balance of current assets on the firm's balance sheet?
$  

What is the balance of current liabilities on the firm's balance sheet?
$  

What is the amount of accounts payable and accruals on its balance sheet? [Hint: Consider this as a single line item on the firm's balance sheet.]
$  

What is the firm's net working capital?
$  

What is the firm's net operating working capital?
$  

What is the monetary difference between your answers to part f and g?
$  

What does this difference indicate?
-Select-The difference indicates Notes payable balanceThe difference indicates Accounts payable balanceThe difference indicates Current liabilities balanceItem 9

Solutions

Expert Solution

Balance Sheet
Current Assets 300000 Notes Payable 155000
Net Plant and Equipments 2600000 Acoounts Payable and accruals 448000
Current Liabilities 603000
Long term debt 747000
Total Liabilities 1350000
Total Common Equity 1550000
Total Assets 2900000 Total Liabilities & Total Common Equity 2900000

a. Total Debt = Short term debt + Long term debt

   Total Debt = 155,000 + 747,000 = 902,000

b.Total Liability and Equity

Total Liability = Current Liabilities and Long term debt = 603,000 + 747,000 = 1,350,000

Total Equity = 1,550,000

Total Liability and Equity = 2,900,000?, will always be equal to the Total Assets.

c. Current Assets = Total Assets - Net Plant and Equipment

   Current Assets = 2,900,000 - 2,600,000 = 3,00,000

d. Current Liabilities = Notes Payable + Acounts Payable and accruals

Accounts Payable and accruals? = Total Liabilities and Common equity - Notes Payable - Long term debt - Total common Equity

Accounts Payable and accruals? = 2,900,000 -155,000 - 747,000 - 1,550,000 = 448,000

Current Liabilities = Notes Payable + Accounts Payable and accruals?

Current Liabilities = 155,000 + 448,000 = 603,000

e. Accounts Payable and accruals? = Total Liabilities and Common equity - Notes Payable - Long term debt - Total common Equity

Accounts Payable and accruals? = 2,900,000 -155,000 - 747,000 - 1,550,000 = 448,000

f. Net Working Capital = Current Assets - Current Liabilties = 300,000 - 603,000 = -303,000

g. Net Operating Working Capital = Current Assets - Accounts Payables and Accruals = 300,00?0 - 448,000 = 148,000

h. Difference = Net Working Capita?l - Net Operating Working Capital? = 303,000 - 148,000 = 155,000

i. The difference indicates Notes Payable balance


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