Homework SourseCurrent assets Current liabilities Cash 72000 Accounts payab
Current assets
Current liabilities
Cash
$72,000
Accounts payable
$12,000
Accounts receivable
18,000
Interest payable
12,000
Interest receivable
1,000
Inventory
60,000
Total current assets
$151,000
Total current liabilities
$24,000
Long-term assets
Long-term liabilities
Equipment (net of depreciation)
$128,000
Note payable
100,000
Total long-term assets
$128,000
Total long-term liabilities
$100,000
Equity
Common stock
10,000
Paid-in capital
50,000
Retained earnings
95,000
Total equity
$155,000
Total assets
279,000
Total liabilities and equity
$279,000
Yes the difference between account payable and accounts receivable is required.
Is accounts payable larger or smaller than accounts receivable? What is the difference? What do the numbers indicate? Explain.
What does \"equipment net of depreciation\" mean?
Are payables short-term or long-term?
Determine total liabilities.
Determine net short-term assets or liabilities.
Determine the total amount owed by VWV at the end of the year.
How do we know that the above is a corporate (not a sole proprietor) balance sheet?
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Solution
Question 1:
Accounts payable is the liability which we incurred for purchase of inventory or other trading activity. Accounts receivable is the amount which we are yet to receive from our customers and so it is an asset.
Accounts receivable = 18000
Accounts payable = 12000
Accounts receivable > Accounts payable. It means that what we are yet to receive is more than what we are yet to pay.
Question 2:
Equipment net of depreciation is the purchase value of asset as reduced by the accumulated depreciation of asset for the used years.
Question 3:
Payables to the extent of 24000 are short term and $100,000 are long term.
Question 4:
Total Liabilities = Short term Libility + Long term Liability = $24000 + $100000 = $124,000
Question 5:
Short term assets = $151,000
Short term Liabilities = $24,000
Net Short term assets = $151,000 - $24,000 = $127,000
Question 6:
Total amount owed = Short term Libility + Long term Liability + Equity
= $24000 + $100000 + $10000 = $134,000
Question 7:
Balance sheet above is that of a corporate because only a corporate can issue common stock and will have excess paid in capital unlike sole proprietor.
