The current asset section of the Excalibur Tire Company’s balance sheet consists

Question

The current asset section of the Excalibur Tire Company’s balance sheet consists of cash, marketable securities, accounts receivable, and inventories. The December 31, 2016, balance sheet revealed the following:

1. Current Assets

2. Shareholders equity

3. Noncurrent assets

4. Long-term liabilities

The current asset section of the Excalibur Tire Company’s balance sheet consists of cash, marketable securities, accounts receivable, and inventories. The December 31, 2016, balance sheet revealed the following:

  Inventories $ 920,000   Total assets $ 3,200,000   Current ratio 2.20   Acid-test ratio 1.20   Debt to equity ratio 1.5 Required: Determine the following 2016 balance sheet items:

1. Current Assets

2. Shareholders equity

3. Noncurrent assets

4. Long-term liabilities

Explanation / Answer

Current Ratio=Current Asset/Current Laib=                     2.20 Current Asset =2.2*Current Laib Debt/Equity=1.5/1 Debt/(Debt+Equity)=1.5/2.5 Debt/Total Assets=1.5/2.5 Total Assets =3200000 Debt=3200000*1.5/2.5 Debt =1,920,000 Shareholders Equity =3200000-1920000=          1,280,000 Acid test Ratio=(Current asset-Inventory)/Current Laib Or, (2.2*Current Liab-920000)/Current Laib=1.20 2.2 Current Laib-920000=1.2 Current Laib Current Liabilities =920000 Current Assets =2.2*920000=          2,024,000 Non Current Assets=Total Asset-Current Asset=          1,176,000 Long term Liabilities=Total Debt-Current Laibilities=          1,000,000 So the Balance sheet Details Are Current Assets          2,024,000 Shareholders Equity          1,280,000 Non Current Assets          1,176,000 Long term Liabilities          1,000,000

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