Mrs. Bullock, the owner of the Garden Inn, a small lodging operation, has asked
ID: 2424820 • Letter: M
Question
Mrs. Bullock, the owner of the Garden Inn, a small lodging operation, has asked for your help in understanding the balance sheets for 20X1 and 20X2. She is able to present you with the condensed balance sheets as follows: -----------------------------------------20X1----------------20X2 Cash----------------------------------9000----------------10800 Accounts Receivable-------------23850----------------16650 Investments--------------------------9000-----------------18000 Equipment---------------------------180000---------------292500 Accumulated Depreciation.......-18000...................-70400 ----Total Assets.......................203850..................267550 Current Liabilities: Accounts Payable......................16200..................18900 Mortgage Payable(current)........4500....................19000 Dividends Payable......................4500.....................7200 Noncurrent Liabilities: Mortgage Payable.......................67500...............93000 Notes Payable.............................18000.................0 Common Stock........................63000...............90000 Treasury Stock........................-18000..................-33000 Retained Earnings....................48150...............72450 ----Total Liab. and O/E..............203850...............267550
A) What amount of existing debt must be paid during 20X3?
B) What is the total of current assets at the end of 20X2?
C) What is the amount of net working capital at the end of 20X2?
D) How has the change in accounts receivable during 20X2 affected cash at the end of 20X2?
E) How much does the Garden Inn owe its stockholders at the end of 20X2?
F) What is the net book value of the foxtail's fixed assets at the end of 20X2?
Explanation / Answer
A./
IN 20X3 THE CURRENT LIBALITY MUST BE PAID, SO TOTAL AMOUNT TO BE PAID IS AS FOLLOWS,
ACCOUNTS PAYBLE = $18900
CURRENT MORTATGE PAYBLE = $19000
DIVIDENDS PAYBLE = $7200
TOTAL = $45100
B./
CURRENT ASSET AT THE END OF 20X2
CASH = $10800
ACCOUNTS RECEIVABLE = $16650
INVESTMENT = $18000 (ASSUMING SHORT TERM INVESTMENT)
TOTAL = $45450
C./
NET WORKING CAPITAL END OF 20X2 = TOTAL CURRENT ASSETS - TOTAL CURRENT LIBALITY
= $45450 - $45100
= $350
D./
E./
OWEING TO STOCK HOLDERS AT THE END OF 20X2
COMMON STOCK OUTSTANDING = $90000
LESS TREASURY STOCK = ($33000)
ADD RETAINED EARNNINGS = $72450
TOTAL = $129450
F./
VALUE OF NET FIXED ASSETS AT END OF 20X2
EQUIPEMENT = $292500
LESS ACCUMULATED DEPERICATION = ($70400)
NET BOOK VALUE = $222100
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