really stuggleing with theese can you please explain with much detail 3. Honey N
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really stuggleing with theese can you please explain with much detail
3. Honey Nuts, Inc. has total assets of $380,000 of which $120,000 are current assets. Cash makes up 20 percent of the current assets and accounts receivable makes up another 15 percent of current assets. Honey Nut's gross plant and equipment has a book value of $215,000 and other long-term assets have a bock value of $100,000. What is the amount of inventory on the balance sheet for Honey Nuts, Inc. A. $24,000 B. $42,000 C. $50,000 D. $65,000 E. $78,000 4. Yellow Boxes, LLC. began the year 2014 with $2,575,000 in retained earnings. The firm eamed net income of $800,000 in 2014 and paid $100,000 to its preferred stockholders. In addition, it paid 5350,000 in dividends to its common stockholders. What is the year-end 2014 balance in retained eamings for Yellow Boxes, LLC.? A. $3,225,000 B. $2,925,000 C. $2,800,000 D. $2,575,000 E. less than $2,575,000 h of the following statements is (are) correct?Explanation / Answer
3.) Total assets = $380,000
Current assets = $120,000
Cash is 20% of current assets i.e. Cash = 0.2*120,000 = $24,000
Accounts receivables is 15% od current assets i.e. accounts receivables = 0.15*120,000 = $18,000
Inventory is part of current assets, therefore, the remaining current assets would be inventory
Therefore inventory = Current assets - cash - accounts receivables = 120,000 - 24,000 - 18,000 = 78,000
Inventory = $78,000
Plant and equipment, and other long-term assets are redundant as these are parts of long-term assets whereas inventory is part of current assets so we need only current assets to calculate the inventory.
So the answer is option e) i.e. $78,000
4.) Retained earning in begining of 2014 = $2,575,000
Net earnings in 2014 = $800,000
Payments to preferred shareholders = $100,000
Dividends = $350,000
Payments to preferred shareholders and dividends are paid from net income. We do not exclude them while calculating net income. So retained earnings for 2014 would be the amount after deducting payments to preferred shareholders and dividends from net income.
Therefore, retaing earnings for 2014 =Net income - payments to preferred shareholders - dividends = 800,000 - 100,000 - 350,000 = $350,000
To calculate the year end retained earning we will add retained earning in beginning of 2014 to retained earning in 2014
Therefore, retained earning balance at end of 2014 = beginning retained earnings + retained earning in the year = 2,575,000 + 350,000 = $2,925,000
So the answer is option b) i.e. $2,925,000
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