Question

In: Accounting

Tony Stark recently received the following information related to Stark Corporation’s December 31, 2020, balance sheet....

Tony Stark recently received the following information related to Stark Corporation’s December 31, 2020, balance sheet.

Prepaid insurance $ 2,300; Inventory $ 1,800; Cash $ 2,500; Equipment $ 6,700; Accounts receivable $ 1,500; Trademarks $ 5,600; Debt investments (long-term) $ 3,300; Accumulated depreciation—Equipment $1,600
Prepare the asset section of Stark Corporation’s classified balance sheet and answer the following questions.

If Stark company purchases a piece of new equipment for $5,000 cash, how will this transaction affect the total current asset? *
Current Assets increases by $5,000
Current Assets decreases by $5,000
Current Assets will remain unchanged
Current Assets will increase by $ 2,500

Net Property, Plant & Equipment as of December 31, 2020 *
$ 6,700
$ 1,600
$ 8,300
$ 5,100

Total Assets as of December 31, 2020 *
$ 20,900
$ 25,600
$ 22,100
$ 25,300

Total Long-term Investments as of December 31, 2020 *
$ 2,500
$ 3,300
$ 5,600
$ 8,400

If Stark company purchases a piece of new equipment for $5,000 cash, how will this transaction affect the total assets? *
Total Assets increases by $5,000
Total Assets decreases by $5,000
Total Assets will remain unchanged
Total Assets will increase by $ 2,500

Total Current Asset as of December 31, 2020 *
$ 2,500
$ 5,800
$ 8,100
$ 14,400

Solutions

Expert Solution

Answer:

1.

The correct answer is Option B (Current assets decreases by $ 5,000)

EXplanation:

Purchase a piece of new equiment with $ 5,000 cash means cash is decreased in current assets ,so the answer is current assets is decreases by $ 5,000.

2.

The correct answer is Option D ($ 5,100).

Explanation:

Calculation of net property, plant and equipment :

Equipment $ 6,700

Less:

Accumulated dep

 $ 1..600
Net property plant and equipment

= $ 6,700 - $ 1,600

= $ 5,100

 $ 5,100

3.

The correct answer is Option C ($ 22,100).

Explanation:

Calculation of total assets:

Particulars Amount Amount
Euipment

$ 6,700 - $ 1,600

= $ 5,100

 $ 5,100
Prepaid insurance $ 2,300
Cash $ 2,500
Inventory $ 1,800
Accounts receivable $ 1,500
Trademarks $ 5,600
Debt investment (Long-term) $ 3,300
Total assets

= $ 5,100 + $ 2,300 +$ 2,500 + $ 1,500 + $ 5,600 + $ 3,300 + $ 1,800

= $ 22,100

 $22,100

4.

The correct answer is Option B($ 3,300).

Explanation:

The long term investment means it is longer than a year so, the debt investment (long-term) is $ 3,300.

5.

The correct answer is Option C( The total assets will remain unchanged).

Explanation:

Total assets will remain unaltered since, supposing that equipment will increased the fixed assets where as money/cash goes decline current assets. so only exchange for assets. Therefore, total assets will remain unchanged.

6.

The correct answer is Option C $ 8,100.

Explanation:

Calculation of total current assets:

Particulars Amount Amount
Inventory $ 1,800
Cash $ 2,500
Accounts receivable $ 1,500
Prepaid insurance $ 2,300
Total current assets $ 8,100

ekkarill92 answered 1 year ago
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