?(Related to Checkpoint? 3.2) ? (Working with the balance? sheet) ??The Caraway
ID: 2619746 • Letter: #
Question
?(Related to Checkpoint? 3.2) ? (Working with the balance? sheet)??The Caraway Seed Company grows heirloom tomatoes and sells their seeds. The heirloom tomato plants are preferred by many growers for their superior flavor. At the end of the most recent year the firm had current assets of $48,400?, net fixed assets of $251,000?, current liabilities of $28,600?, and? long-term debt of $101,200.
a. Calculate? Caraway's stockholders' equity.
b. What is the? firm's net working? capital?
c. If? Caraway's current liabilities consist of $21,300 in accounts payable and $7,300 in? short-term debt? (notes payable), what is the? firm's net working? capital?
a. Calculate? Caraway's stockholders' equity.
?Caraway's stockholders' equity is ?$_______ (Round to the nearest? dollar.)
b. What is the? firm's net working? capital?
The? firm's net working capital is ?$_______ (Round to the nearest? dollar.)
Explanation / Answer
Requirement (a) - Caraway's stockholders' equity = $ 169,600
Requirement (b) - Firm's net working? capital = $19,800
Requirement (c) - Firm's net working? capital = $27,100
Requirement (a) - Caraway's stockholders' equity
As we know, Accounting Equation for Balance Sheet is;
Total Assets = Liabilities + Stockholders equity
[$48,400 + 251,000] = [$28,600 + 101,200] + Stockholders equity
$299,400 = $129,800 + Stockholders equity
Therefore, Stockholders equity = $299,400 – 129,800 = $ 169,600
Requirement (b) - Firm's net working capital
Net working capital = Total Current Assets – Total Current Liabilities
= $48,400 – 28,600
= $19,800
Requirement (c) - Firm's net working capital
Net working capital = Total Current Assets – Total Current Liabilities
= $48,400 – [$28,600 – 7,300]
= $27,100
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