Sunset, Inc., has a book value of equity of $14,130. Long-term debt is $8,150. N

Question

Sunset, Inc., has a book value of equity of $14,130. Long-term debt is $8,150. Net working capital, other than cash, is $2,140. Fixed assets are $19,470 and current liabilities are $1,760.
  
How much cash does the company have? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
  
Cash            $
  
What is the value of the current assets? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
  
Current assets            $

Explanation / Answer

Given:

Book value of equity= $14,130

Long term debt= $8,150

Net working capital other than cash= $2,140

Fixed assets= $19,470

Current liabilities= $1,760

1.Total liability= long term debt+ current liabilities

                             = $8,150+ $1,760= $9,910

According to the accounting equation:

Assets= Liabilities +Equity

            = $9,910+ $14,130= $24,040

Net working capital other than cash= $2,140

Current currents apart from cash- Current liabilities= $2,140

Therefore, Current currents apart from cash= $1,760+$2,140= $3,900

Assets= Fixed assets+ Current assets apart from cash + Cash

Cash= Assets- (Fixed assets+ Current assets apart from cash)

          = $24,040- ($19,470+ $3,900)

          = $24,040- $23,370= $670

Therefore, cash is $670

2.Current assets= Current currents apart from cash+ Cash

                               = $3,900+ $670= $4,570

Therefore, current assets is $4,570

I hope that was helpful :)

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