BALANCE SHEET The assets of Dallas & Associates consist entirely of current asse
ID: 2805061 • Letter: B
Question
BALANCE SHEET The assets of Dallas & Associates consist entirely of current assets and net plant and equipment. The firm has total assets of $2.9 million and net plant and equipment equals $2.6 million. it has note payable of $155,000, long-term debt of $747,000, and total common equity of $1.45 million. The firm does have accounts payable and accruals on its balance sheet. The firm anly finances with debt and common equity, so it has no preferred stock on its balance sheet. Write out your ansmers cempletely. For example, 25 llion should be entered as 25,000,000. Enter negative amounts, if amy, with a minus sign. a. What is the company's total debt? b. What is the amount of total liabilities and equity that appears on the firm's balance sheet? C. What is the balance of current assets on the firm's balance sheet? d. What is the balance of current liabilities on the firm's balance sheet? e. What is the amount of accounts payable and accruals on its balance sheet? (Hint: Consider this as a single line item on the firm's balance sheet f. What is the firm's net working capital g What is the firm's net operating working capital h What is the monetary difference between your answers to part f and g?Explanation / Answer
Try to imagine a typical balance sheet or make a rough one when you are reading this answer, it will help you better understand it.
a) Total debt = notes payable + Long - term debt = $155000 + $747000 = $902000
b) Total Liabilities and equity = Total Assets = $2,900,000
c) Balance of current assets = Total Assets - Net property plant and equipment = $2,900,000 - $$2,600,000 = $300,000
d) Balance of current liabilities = Total Liabilities and equity - Total equity - Total Debt = $2,900,000 - $1,450,000 - $902,000 = $548,000
e) Balance of accounts payable and accruals = Current Liabilities - notes payable = $548,000 - $155,000 = $393,000
f) Net Working Capital = Current Assets - Current Liabilities = $300,000 - $548,000 = (-)$248,000
g) Net Operating working capital = Current Assets - Accounts payables and accruals = $300,000 - $393,000 = (-)$93,000
h) Difference in part f and g = Notes payable = $155,000
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