Wednesday, November 13, 2019

Four years ago, Velvet Purses purchased a mailing machine at a cost of $176,000.

A firm has net working capital of $640. Long-term debt is $4,180, total assets are $6,230, and fixed assets are $3,910. What is the amount of the total liabilities? 
 
A. 
$2,050

B. 
$2,690

C. 
$4,130

D. 
$5,590

E. 
$5,860
Current assets = $6,230 - $3,910 = $2,320
Current liabilities = $2,320 - $640 = $1,680
Total liabilities = $1,680 + $4,180 = $5,860


48.
A firm has common stock of $6,200, paid-in surplus of $9,100, total liabilities of $8,400, current assets of $5,900, and fixed assets of $21,200. What is the amount of the shareholders' equity? 
 
A. 
$6,900

B. 
$15,300

C. 
$18,700

D. 
$23,700

E. 
$35,500
Shareholders' equity = $5,900 + $21,200 - $8,400 = $18,700
(Note: The amount of retained earnings is not provided, so you must use total assets minus total liabilities to derive the correct answer.)

  
49.
Your firm has total assets of $4,900, fixed assets of $3,200, long-term debt of $2,900, and short-term debt of $1,400. What is the amount of net working capital? 
 
A. 
-$100

B. 
$300

C. 
$600

D. 
$1,700

E. 
$1,800
Net working capital = $4,900 - $3,200 - $1,400 = $300
  
50.
Bonner Collision has shareholders' equity of $141,800. The firm owes a total of $126,000 of which 60 percent is payable within the next year. The firm net fixed assets of $161,900. What is the amount of the net working capital? 
 
A. 
$25,300

B. 
$30,300

C. 
$75,600

D. 
$86,300

E. 
$111,500
Current liabilities = .60 × $126,000 = $75,600
Total assets = $141,800 + $126,000 = $267,800
Current assets = $267,800 - $161,900 = $105,900
Net working capital = $105,900 - $75,600 = $30,300


51.
Four years ago, Velvet Purses purchased a mailing machine at a cost of $176,000. This equipment is currently valued at $64,500 on today's balance sheet but could actually be sold for $58,900. This is the only fixed asset the firm owns. Net working capital is $57,200 and long-term debt is $111,300. What is the book value of shareholders' equity? 
 
A. 
$4,800

B. 
$7,700

C. 
$10,400

D. 
$222,600

E. 
$233,000
Book value of shareholders' equity = $64,500 + $57,200 - $111,300 = $10,400

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