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# Ch4.Answers (1) - Chapter 4 Answers 1 Current assets.4 x 16...

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Chapter 4 Answers 1. Current assets: (.4 x 16 million) = 6,400,000 Net fixed assets: (.6 x 16 million) = 9,600,000 Total assets: (6,400,000 + 9,600,000) = 16,000,000 Accounts payable: (.3 x 16 million) = 4,800,000 Long-term debt: (non spontaneous) = 3,000,000 Total liabilities: (4,800,000 + 3,000,000) = 7,800,000 Common stock: (non spontaneous) = 1,000,000 Paid in capital: (non spontaneous) = 1,500,000 Retained earnings: (REnew= REold + NI – Div) 1,500,000 + 2,250,000 – 0 = 3,750,000 Total equity: (1,000,000 + 1,500,000 + 3,750,000) = 6,250,000 DFN = 16,000,000 – 7,800,000 – 6,250,000 = 1,950,000 2. a. Accounts receivable (4/30) = \$30,000 Plus credit sales for May= \$26,000 (.5 x 52,000) Less collections from April= \$12,500 (.5 x 50,000 x .5) Less collections from March= \$11,500 (.5 x 46,000 x .5) Total= \$32,000 b. May cash sales= \$26,000 April credit sales= \$12,500 March credit sales= \$11,500 Total= \$50,000 3. Current assets: (.25 x 10 million) = 2,500,000 Fixed assets: (non spontaneous) = 2,000,000 Total Assets: (2,500,000 + 2,000,000) = 4,500,000 Short-term payables: (.15 x 10 million) = 1,500,000 Long-term debt (non spontaneous) = 1,000,000 Total liabilities: (1,500,000 + 1,000,000) = 2,500,000 Common equity: (non spontaneous) = 1,500,000 Retained earnings: .06 x 10 million – (.06 x 10 million x .6) = 240,000 Total equity: (1,500,000 + 240,000) = 1,740,000 DFN = 4,500,000 – 2,500,000 – 1,740,000 = 260,000

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4. a. Current assets: (1.5/8 x 10 million) = 1,875,000 Fixed assets (non spontaneous) = 2,000,000 Total assets: (1,875,000 + 2,000,000) = 3,875,000 b. Current liabilities: (.9/8 x 10 million) = 1,125,000
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