BALANCE SHEET The assets of Dallas & Associates consist entirely of current asse
ID: 2804657 • 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 $2.7 million and net plant and equipment equals $2.4 million. It has notes payable of $145,000, long term debt of $745,000, 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. Write out your answers completely. For example, 25 million should be entered as 25,000,000. Enter negative amounts, if any, 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.] 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 fand g? What does this difference indicate? -Seect-Explanation / Answer
Answer a.
Total Debt = Notes Payable + Long-term Debt
Total Debt = $145,000 + $745,000
Total Debt = $890,000
Answer b.
Total Liabilities and Equity = Total Assets
Total Liabilities and Equity = $2,700,000
Answer c.
Current Assets = Total Assets - Net Plant and Equipment
Current Assets = $2,700,000 - $2,400,000
Current Assets = $300,000
Answer d.
Total Current Liabilities = Total Liabilities and Equity - Total Common Equity - Long-term Debt
Total Current Liabilities = $2,700,000 - $1,450,000 - $745,000
Total Current Liabilities = $505,000
Answer e.
Accounts Payable and Accruals = Total Current Liabilities - Notes Payable
Accounts Payable and Accruals = $505,000 - $145,000
Accounts Payable and Accruals = $360,000
Answer f.
Net Working Capital = Current Assets - Current Liabilities
Net Working Capital = $300,000 - $505,000
Net Working Capital = -$205,000
Answer g.
Net Operating Working Capital = Current Assets - Accounts Payable and Accruals
Net Operating Working Capital = $300,000 - $360,000
Net Operating Working Capital = -$60,000
Answer h.
The difference between f) and g) represent the balance of notes payable.
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