Respuesta :
Answer:
a) Total Current Assets $ 90,000
b) Short Term Investments $ 5,000
c) Retained Earnings $ 20,000
Explanation:
To determine the total current assets we have to work with the current ratio information provided in the question.
The current assets are:
Cash and cash equivalents $ 5,000
Accounts receivable (net) $ 20,000
Inventories $ 60,000
Current assets excluding Short term investments $ 85,000
The current liabilities are:
Accounts Payable $ 44,000
Wages Payable $ 15,000
Accrued interest due in 4 months $ 1,000
Total current liabilities $ 60,000
The current ratio at year end is 1.5 : 1
The total current assets is 1.5 * $ 60,000 = $ 90,000
The short term investments is calculated as
Total Current assets - Current assets excluding short term investments
$ 90,000 - $ 85,000 = $ 5,000 Short Term Investments
For determining the retained earnings, we have to use the balance sheet equation.
Total assets = Total liabilities + Stockholders Equity
Total assets = Current assets + Fixed Assets
Total assets = $ 90,000 + 120,000 ( Net Property Plant & Equipment)
Total assets = $ 210,000
Total liabilities = Current Liabilities + Long term Liabilities
$ 60,000 + 30,000 (Note Payable ) = $ 90,000
Using the balance sheet equation
$ 210,000 ( Total assets) - $ 90,000 (Total Liabilities) + Shareholders Equity
$ 120,000 = Shareholders equity
Shareholders equity = Capital + Retained earnings
$ 120,000 = $ 100,000 + Retained earnings
Retained Earnings = $ 20,000
