Question

The assets of Dallas & Associates consist entirely of current assets and net plant and equipment, and the firm has no excess cash. The firm has total assets of $2.7 million and net plant and equipment equals $2.3 million. It has notes payable of $150,000, long-term debt of $748,000, 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. Negative values, if any, should be indicated by a minus sign. Round your answers to the nearest dollar, if necessary.

1. What is the company's total debt?
     $  
2. 
   
3. What is the amount of total liabilities and equity that appears on the firm's balance sheet?
   $  
4. 
   
5. What is the balance of current assets on the firm's balance sheet?
   $  
6. 
   
7. What is the balance of current liabilities on the firm's balance sheet?
   $  
8. 
   
9. 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.)
   $  
10. 
    
11. What is the firm's net working capital? If your answer is zero, enter "0". Negative value, if any, should be indicated by a minus sign.
    $  
12. 
    
13. What is the firm's net operating working capital?
    $  
14. 
    
15. What is the monetary difference between your answers to part f and g?
    $  
    
    What does this difference indicate?
    -Select-The difference indicates Notes payable balance.The difference indicates Accounts payable balance.The difference indicates Current liabilities balance.

Answer 1

Solution;

a) Total assets - 2700,000

b) Net plant and equipment - 2300,000

c) Net current assets (2700,000-2300,000) - 400,000

d) Notes payable - 150,000

e) Long term debt - 748000

f) Total common equity - 1550,000

Accounts payables and accurals [2700,000 -(150000+748000+1550000) ]    - 252000*

1. What is companies total debt = Notes payable + Long term debt + Accounts payable and accurals

                                                = 150,000 + 748000 + 252000* = 1150,000

2. What is the amount of total liabilities and equity that appears on firm's balancesheet

                Total debt / Total liability + Total common equity

            = 1150,000   + 1550,000 =2700,000

3. What is the balance of current asset on firms balancesheet = 400,000

4. What is the balance of current liability on firms balancesheet = Notes payable + Accounts payable and accruals

                                                                                               = 150,000 + 252000*= 402000

5. What is the amount of accounts payable and accruals on its balancesheet = 252000*

6. What is the firm's net working capital = Current asset - Current liability

                                                          = 400,000 - 402000 = (2000)

7. What is the firms net operating working capital = Operating current asset - Operating current liability

                                                        = Current assets -(Notes payable + Accounts payable and accruals )

                                                        = 400,000 - 402000 = (-2000)

8. In this question (f) is not given.