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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
Accounts receivable (net) 5,700
Inventory l 27,000
Property, plant, and equipment (net) 67,000
Accounts pay able 46,000
Salaries payable 18,000
Paid-in capitapoints 135,000
The only asset not listed is short-term investments. The only liabilities not listed are $37000 notes payable due in two years and related accrued interest of $1,000 due in four months. The current ratio at year-end is 1.6:1
Required: Determine the following at December 31, 2021:
1. Total current assets
2. Short-term investments
3. Retained earnings

Sagot :

Answer:

1. Total current assets = $104,000

2. Short term investments = $4,300

3. Retained earnings = $27,000

Explanation:

Note: The data given in the question are not complete and merged together. The complete sorted data are  now given as follows:

Details                                                     Amount ($)

Cash and cash equivalents                       5,700

Accounts receivable (net)                         27,000

Inventory                                                    67,000

Property, plant, and equipment (net)      160,000

Accounts pay able                                     46,000

Salaries payable                                         18,000

Paid-in capital                                           135,000

The explanation of the answer is now given as follows:

1. Total current assets

Current liabilities =  Accounts playable + Salaries payable + Accrued interest = $46,000 + $18,000 + $1,000 = $65,000

Current ratio = 1.6:1

Current ratio = Current assets / Current liabilities .............. (1)

Substituting the relevant values into equation (1) ans solve for Current assets, we have:

1.6 = Current assets / $65,000

Current assets = 1.6 * $65,000 = $104,000

Therefore, wee have:

Total current assets = $104,000

2. Short-term investments

Current assets = Cash and cash equivalents + Accounts receivables + Inventory + Short term investments ............... (2)

Substituting the relevant values into equation (2) ans solve for Short-term investments, we have:

$104,000 = $5,700 + $27,000 + $67,000 + Short term investments

$104,000 = $99,700 + Short term investments

Short term investments = $104,000 - $99,700 = $4,300

3. Retained earnings

Long term liabilities = Notes payable due in two years = $37,000

Fixed assets = Property, plant, and equipment (net) = $160,000

Current assets + Fixed assets = Current liabilities + Long term liabilities + Paid in capital + Retained earnings ................. (3)

Substituting the relevant values into equation (3) ans solve for Retained earnings, we have:

$104,000 + $160,000 = $65,000 + $37,000 + $135,000 + Retained earnings

$264,000 = $237,000 + Retained earnings

Retained earnings = $264,000 - $237,000 = $27,000

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