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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) Inventory Property, plant, and equipment (net) Accounts payable Salaries payable Paid-in capital $ 5,900 29,000 69,000 165,000 48,000 20,000 145,000 The only asset not listed is short-term investments
The following December 31, 2021, fiscal year-end account balance information is available for the Stonebridge Corporation: Cash and cash equivalents Accounts receivable (net) Inventory Property, plant, and equipment (net) Accounts payable Salaries payable Paid-in capital $ 5,900 29,000 69,000 165,000 48,000 20,000 145,000 The only asset not listed is short-term investments. The only liabilities not listed are $39.000 notes payable due in two years and related accrued interest of $1,000 due in four months. The current ratio at year-end is 1.6:1. Required: Determine the following at December 31, 2021: 1. Total current assets 2. Short-term investments 3. Retained earnings
Expert Solution
| 1 | Total current asset | $110400 |
| 2 | Short term investment | $6500 |
| 3 | Retained earnings | $22400 |
Workings
1. total current liabilities = account payable + wages payable + accrued interest
= 48000 + 20000 + 1000
=69000
with the current ratio of 1.6:1 , that means total current asset are 1.6 times the total current liabilities. So,
total current asset = 69000*1.6 = 110400
2. Short term investment = total current asset - cash - account recievable - inventories
= 110400 - 5900 - 29000 - 69000
= 6500
3.
| cash and cash equivalents | 5900 |
| account recievables | 29000 |
| inventories | 69000 |
| short term investments | 6500 |
| PPE (net) | 165000 |
| Total asset | 275400 |
| Accounts payable | 48000 |
| wages payable | 20000 |
| interest payable | 1000 |
| note payable | 39000 |
| paid in capital | 145000 |
| Retained earnings | ?? |
| total equity and liabilities | 275400 |
so retained earnings = 275400 - 253000
= 22400
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