Assume the following year end estimates: Current liabilities = $20 million Long
ID: 2617773 • Letter: A
Question
Assume the following year end estimates:
Current liabilities = $20 million
Long term debt = $80 million
Deferred tax liabilities = $10 million
Beginning retained earnings = $30 million
Dividend payments for the year = $5 million
Preferred shareholder equity $15 million
Capital stock = $25 million
Additional paid in capital = $100 million
Revenues = $200 million
Expenses including tax = $150 million
What is the best estimate of total assets?
I know the answer is $325 million, but I want to understand the work. Thank you.
Explanation / Answer
Total Assets = Total liabilities + Shareholder's fund
= $110 million + $ 215 million
= $325 million
Total liabilities = Current liabilities + Long term liabilities
= Current liabilities + Deferred tax liabilities + Long term debt
= 20 million + 10 million +80 million
= 110 million
Shareholder's fund = Capital stock + Preferred shareholder equity + Additional paid in capital + Retained earnings at end (Beginning retained earnings - Dividend payments for the year + Revenues- Expenses including tax )
= 25 million + 15 million + 100 million + (30 million - 5 million + 200 million - 150 million)
= 215 million
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