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The following December 31, 2021, fiscal year-end account balance information is available for the Stonebridge Corporation:Cash and cash equivalents $ 5,000Accounts receivable (net) 20,000Inventory 60,000Property, plant, and equipment (net) 120,000Accounts payable 44,000Salaries payable 15,000Paid-in capital 100,000The only asset not listed is short-term investments. The only liabilities not listed are $30,000 notes payable due in two years and related accrued interest of $1,000 due in four months. The current ratio at year-end is 1.5:1.Required:Determine the following at December 31, 2021:1. Total current assets2. Short-term investments3. Retained earnings

Sagot :

abiolataiwo2015

Answer:

1. $90,000

2. $5,000

3. $20,000

Explanation:

1. Calculation to Determine the Total current assets

First step is to calculate the Total current liabilities using this formula

Total current liabilities=Accounts payable + Wages payable + Accrued Interest

Let plug in the formula

Total current liabilities=$44,000 + $15,000 + $1,000

Total current liabilities= $60,000

Now let calculate the Total current assets using ratio 1.5

Total current assets =1.5 × $60,000 x 1.5

Total current assets=$90,000

Therefore the Total current assets will be 90,000

2. Calculation to Determine the Short term investments using this formula

Short term investments=Total current assets - Cash - Accounts receivable - Inventories

Let plug in the formula

Short term investments=$90,000 - $5,000 - $20,000 - $60,000

Short term investments= $5,000

Therefore the Short term investments will be $5,000

3. Calculation to Determine the Retained earnings

First step is to calculate the Total Assets

Cash and cash equivalents $5,000

Add Accounts receivable (net) $20,000

Add Inventories $60,000

Add Short term investments $5,000

Add Property, plant, and equipment (net) 120,000

TOTAL ASSETS $210,000

Now let calculate the Retained Earnings

Total Assets $210,000

Less Accounts payable ($44,000)

Less Salaries payable ($15,000)

LessAccrued interest ($1,000)

Less Notes payable ($30,000)

Less Paid-in capital ($100,000)

RETAINED EARNINGS $20,000

Therefore the Retained Earnings will be $20,000

The following answer of "The Stonebridge Corporation" at December 31, 2021:

  1. Total current assets will be 90,000
  2. Short term investments will be $5,000
  3. Retained Earnings will be $20,000

                     

"The Stonebridge Corporation"

Answer 1:

Total current assets

  • Total current liabilities=Accounts payable + Wages payable + Accrued Interest
  • Total current liabilities=$44,000 + $15,000 + $1,000
  • Total current liabilities= $60,000

Total current assets=$90,000

  • Total current assets using ratio 1.5
  • Total current assets =1.5 × $60,000 x 1.5
  • Total current assets=$90,000

Therefore, the Total current assets is 90,000.

Answer 2:

Short term investments

  • Short term investments=Total current assets - Cash - Accounts receivable - Inventories
  • Short term investments=$90,000 - $5,000 - $20,000 - $60,000
  • Short term investments= $5,000

Thus, the Short term investments is $5,000.

Answer 3:

Retained Earnings

  • Total Assets $210,000
  • Less Accounts payable ($44,000)
  • Less Salaries payable ($15,000)
  • LessAccrued interest ($1,000)
  • Less Notes payable ($30,000)
  • Less Paid-in capital ($100,000)

        Retained earnings$20,000

Working Notes:

        Cash and cash equivalents $5,000

  • Add Accounts receivable (net) $20,000
  • Add Inventories $60,000
  • Add Short term investments $5,000
  • Add Property, plant, and equipment (net) 120,000

      Total Assets $210,000

Thus, the Retained Earnings is $20,000.

Learn more about "Accounting ratio" :

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