Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $3 m
ID: 1170759 • Letter: K
Question
Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $3 million. The machinery can be sold to the Romulans today for $2.5 million. Klingon's current balance sheet shows net fixed assets of $2 million, current liabilities of $710,000, and net working capital of $227,000. If all the current accounts were liquidated today, the company would receive $1.09 million cash. What is the book value of Klingon's total assets today? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.) Book value of total assets 2227000 | ? What is the sum of the market value of NWC and the market value of fixed assets? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.) 2880000 Sum of the market value of NWC and market value of fixed assets References Worksheet Difficulty: Basic and maExplanation / Answer
Q1.
Working capital = Current assets – Current liabilities
227,000 = Current assets – 710,000
Current assets = 227,000 + 710,000
= $937,000
Total assets = Fixed assets (FA) + Current assets
= 2,000,000 + 937,000
= $2,937,000 (Answer)
Q2.
The market value for FA is its selling amount, $2,500,000.
Market value of working capital is the cash amount, $1,090,000.
The required sum = Market value of working capital + market value for FA
= 1,090,000 + 2,500,000
= $3,590,000 (Answer)
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