Science - Week one exercise E3-18 (Page 152) The current...

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Week one exercise E3-18 (Page 152) The current asset section of the Excalibur Tire Company's balance sheet consist of cash, marketable securities, accounts receivable, and inventories. The December 31, 2011, balance sheet revealed the following: Inventories - $840,000 Total assets - $2,800,000 Current ratio - 2.25 Acid-test ratio - 1.2 Debt to equity ratio - 1.8 Determine the following 2011 balance sheet items: 1. Current assets 2. Shareholders' equity 3. Noncurrent assets 4. Long-term liabilities 1. Acid-test ratio = quick assets / current liabilities = 1.20 Quick assets = current assets – inventories Quick assets = current assets - $840,000 Current assets / current liabilities = 2.25 Current assets - $840,000 / current liabilities = 1.20 $840,000 / current liabilities = 1.05 Current liabilities = $1,800,000 Current assets / $800,000 = 2.25 Current assets = $1,800,000 2. Debt to equity ratio = total liabilities / shareholder’s equity = 1.8 Total liabilities + shareholder’s equity = Total assets Total liabilities + shareholder’s equity = $2,800,000 Let x equal shareholders equity 1.8 x + x = $2,800,000 X = $1,000,000 = shareholders equity 3. Noncurrent assets = total assets – current assets Noncurrent assets = $2,800,000 – 1,800,000 = $1,000,000 4. Long-term liabilities = total assets – current liabilities – shareholders equity
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Science - Week one exercise E3-18 (Page 152) The current...

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