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Assign 2 Chapter 5 Understanding The Financial Statements Prob 1 Answer Cabrera 2019-2020

The document discusses a statement of financial position with the following information: - Total assets are $2,500,000 - Net fixed assets are $2,000,000 - Notes payable are $150,000 - Long-term debt is $750,000 - Total common equity is $1,500,000 It then provides the calculations to determine: 1) Current assets of $500,000 2) Current liabilities of $250,000 3) Accounts payable and accruals of $100,000 4) Net working capital of $250,000 5) Net operating working capital of $400,000

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2K views

Assign 2 Chapter 5 Understanding The Financial Statements Prob 1 Answer Cabrera 2019-2020

The document discusses a statement of financial position with the following information: - Total assets are $2,500,000 - Net fixed assets are $2,000,000 - Notes payable are $150,000 - Long-term debt is $750,000 - Total common equity is $1,500,000 It then provides the calculations to determine: 1) Current assets of $500,000 2) Current liabilities of $250,000 3) Accounts payable and accruals of $100,000 4) Net working capital of $250,000 5) Net operating working capital of $400,000

Uploaded by

mhikeedelantar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Mhecaila Canciller Ms.

Maria Luisa Dy
BSA-BSAC02 FINMGT1
UNDERSTANDING THE FINANCIAL STATEMENTS
PROBLEM 1: (Statement of Financial Position)
GIVEN:
Total Asset 2,500,000 Notes Payable 150,000
Net Fixed 2,000,000 Long-Term Debt 750,000
Asset
Total Common 1,500,000
Equity

REQUIREMENTS:
**need proforma balance sheet
A. 2,500,000
Solution:
Asset= Liabilities + Equity

(Total Asset) 2,500,000= (Total Liabilities and Equity) 2,500,000

B. 500,000
Solution:
Work back from total Asset:

Current Assets 500,000


Net Fixed Assets 2,000,000
Total Assets 2,500,000

C. 250,000
Solution:
Work back from total liabilities and equity:
Current Liabilities 250,000
Long-Term Debt 750,000
Total Liabilities 1,000,000
Common Equity 1,500,000
Total liabilities and equity 2,500,000

D. 100,000
Solution:
Work back from current liabilities:

Accounts Payable 100,000


and Accruals
Notes Payable 150,000
Current Liabilities 250,000
Mhecaila Canciller Ms. Maria Luisa Dy
BSA-BSAC02 FINMGT1

E. 250,000
Solution:
Net Working Capital= Current Assets- Current Liabilities

Net Working Capital= 500,000 – 250,000


Net Working Capital= 250,000

F. 400,000
Solution:
Net Operating Working Capital= Current Assets- (Current Liabilities – Interest-bearing current liabilities)

Net Operating Working Capital= 500,000- (250,000–150,000)


Net Operating Working Capital= 500,000- 100,000
Net Operating Working Capital= 400,000

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