The bookkeeper for Packard’s Country Music Bar left this incomplete balance shee

Question

The bookkeeper for Packard’s Country Music Bar left this incomplete balance sheet. Packard’s working capital is $90,000 and its debt to assets ratio is 40 percent.

Required
Complete the balance sheet by supplying the missing amounts

The bookkeeper for Packard's Country Music Bar left this incomplete balance sheet. Packard's working capital is $90,000 and its debt to assets ratio is 40 percent. Required Complete the balance sheet by supplying the missing amounts Assets Current assets Cash Accounts receivable Inventory Prepaid expenses $ 21,000 42,000 9,000 Total current assets Long-term assets Building Less: Accumulated depreciation (39,000) 210,000 Total long-term assets Total assets Liabilities and Stockholders' Equity Liabilities Current liabilities Accounts payable Notes payable Income tax payable 12,000 10,500 37,500 Total current liabilities Long-term liabilities Mortgage payable Total liabilities Stockholders' equity Common stock 105,000 Retained earnings Total stockholders' equity Total liabilities and stockholders' equity

Explanation / Answer

(1) Accounts payable

Total current assets are give as = 37500. So Accounts payable = 37500 - 10500 - 12000 = 15000

(2) Total current assets and Inventory

Total current assets - total current liabilities = working capital

Total current assets = 90000 + 37500 = 127500

Inventory = 127500 - 21000 - 42000 - 9000 = 55500

(3) Total assets and cost of building

Total assets = Long term assets (net) + current assets = 210000 + 127500 = 337500

Cost of building = 210000 + 39000 = 249000

(4) Total debt and Mortgage payable

Total debt / Total assets = 0.40

Total debt = 0.40 * 337500 = 135000

Mortgage payable = 135000 - total current liabilities of 37500 = 97500

(5) Share holders equity and retained earnings

Share holders equity = Total assets - total debt = 337500 - 135000 = 202500

Retained earnings = 202500 - 105000 = 97500

BALANCE SHEET WITH FILLED IN MISSING VALUES

Amt($) working note Cash 21000 Accounts receivable 42000 Inventory 55500 Refer (2) Prepaid 9000 Total current assets 127500 Long term assets Building 249000 Refer (3) accumulated depreciation -39000 total long term assets 210000 Total assets 337500 Refer (3) Liabilities and stockholders equity Liabilities Current liabilities Accounts payable 15000 Refer (1) Notes payable 12000 Income tax payable 10500 Total current liabilities 37500 Mortgage payable 97500 Refer (4) Total liabilites 135000 Stockholders equity Common stock 105000 Retained earnings 97500 Refer (5) Stockholders equity (ending) 202500 Total liab and stock holders equity 337500

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