In: Accounting
The assets of Dallas & Associates consist entirely of current assets and net plant and equipment. The firm has total assets of $2.7 million and net plant and equipment equals $2.2 million. It has notes payable of $140,000, long-term debt of $750,000, 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.
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Answer a.
Total Debt = Notes Payable + Long-term Debt
Total Debt = $140,000 + $750,000
Total Debt = $890,000
Answer b.
Total Liabilities and Equity = Total Assets
Total Liabilities and Equity = $2,700,000
Answer c.
Current Assets = Total Assets - Net Plant and Equipment
Current Assets = $2,700,000 - $2,200,000
Current Assets = $500,000
Answer d.
Total Liabilities = Total Assets - Total Common Equity
Total Liabilities = $2,700,000 - $1,550,000
Total Liabilities = $1,150,000
Current Liabilities = Total Liabilities - Long-term Debt
Current Liabilities = $1,150,000 - $750,000
Current Liabilities = $400,000
Answer e.
Accounts Payable and Accruals = Current Liabilities - Notes
Payable
Accounts Payable and Accruals = $400,000 - $140,000
Accounts Payable and Accruals = $260,000
Answer f.
Net Working Capital = Current Assets - Current Liabilities
Net Working Capital = $500,000 - $400,000
Net Working Capital = $100,000
Answer g.
Net Operating Working Capital = Net Working Capital + Notes
Payable
Net Operating Working Capital = $100,000 + $140,000
Net Operating Working Capital = $240,000
Answer h.
The difference indicates notes payable balance.