Balance Sheet The assets of Dallas & Associates consist entirely of current asse
ID: 2673067 • Letter: B
Question
Balance SheetThe assets of Dallas & Associates consist entirely of current assets and net plant and equipment. The firm has total assets of $2.6 million and net plant and equipment equals $2.1 million. It has notes payable of $145,000, long-term debt of $752,000, and total common equity of $1.45 million. The firm does have accounts payable and accruals on its balance sheet. The firm only finances with debt and common equity, so it has no preferred stock on its balance sheet.
What is the amount of total liabilities and equity that appears on the firm's balancesheet? $ ________
What is the balance of current assets on the firm's balance sheet? $ ________
What is the balance of current liabilities on the firm's balance sheet? $ ________
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.] $ ________
What is the firm's net working capital? $ ________
What is the firm's net operating working capital? $ ________
What is the monetary difference between your answers to part e and f? $ ________
Explanation / Answer
What is the amount of total liabilities and equity that appears on the firm's balancesheet?
Total liabilities and equity must equal total assets so,
$2.6 million or $2,600,000
What is the balance of current assets on the firm's balance sheet?
Current assets are the assets that aren't plant and equipment
so $2,600,000 - $2,100,000 = $500,000 or .5 million
What is the balance of current liabilities on the firm's balance sheet? $ ________
Well current liabilites doesn't include long-term debt or common equity and we know the total liablites and equity is $2,600,000.
So current liabilities = $2,600,000 - long-term debt - total common equity
current liabilites = $2,600,000 - $752,000 - $1,450,000 = $398,000
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.]
Well total liablities and equity is $2,600,000 and we know the ones that aren't accounts payable and accruals.
So accounts payable and accurals = $2,600,000 - notes payable - long-term debt - total common equity
$2,600,000 - $145,000 - $752,000 - $1,450,000 = $253,000
What is the firm's net working capital? $ ________
Net Working Capital = Current Assets - Currrent Liablities
= $500,000 - $398,000 = $102,000
What is the firm's net operating working capital?
Net Operating Working Capital = Current Assets - accounts payable and accurals
= $500,000 - $253,000 = $247,000
What is the monetary difference between your answers to part e and f? $
$247,000 - $102,000 = $145,000 more net operating working capital then net working capital.
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