Question

Tim Dye, the CFO of Blackwell Automotive, Inc., is putting together this year's financial statements. He has gathered the following balance sheet information: The firm had a cash balance of $23,015, accounts payable of $163,257, common stock of $311,300, retained earnings of $512,159, inventory of $213,000, goodwill and other assets equal to $78,656, net plant and equipment of $714,100, and short-term notes payable of $21,115. It also had accounts receivable of $141,258 and other current assets of $11,223. How much long-term debt does Blackwell Automotive have?

Answer 1

Blackwell Automotive's long-term debt is calculated by determining total liabilities using the accounting equation and subtracting short-term liabilities from this amount. After performing the calculations, the long-term debt is found to be $173,421.

Step-by-step explanation:

To determine the amount of long-term debt that Blackwell Automotive has, we need to calculate the liabilities that are not enumerated in the balance sheet information provided and subtract the sum of short-term liabilities from the total liabilities. Total liabilities can be derived by adding together the company's equity and liabilities, and subtracting its assets, since the basic accounting equation states that Assets = Liabilities + Equity. Here, the equity components are common stock and retained earnings.

The sum of the equity is the common stock of $311,300 plus retained earnings of $512,159, equating to $823,459. Summing up the given liabilities, we have accounts payable of $163,257 and short-term notes payable of $21,115, which totals to $184,372. Now, we compile the assets which include cash of $23,015, inventory of $213,000, goodwill and other assets of $78,656, net plant and equipment of $714,100, accounts receivable of $141,258, and other current assets of $11,223, leading to a sum of $1,181,252.

Using the accounting equation to find total liabilities: $1,181,252 (assets) = Total Liabilities + $823,459 (equity), we discover that Total Liabilities are $357,793. Subtracting the total short-term liabilities from this amount, we are left with long-term debt: $357,793 (Total Liabilities) - $184,372 (Short-term liabilities) = $173,421. Therefore, Blackwell Automotive's long-term debt is $173,421.

Answer 2

210,421 Long-Term Liabilities

Step-by-step explanation:

We are going to use the accounting equation to solve for long term liabilities

`Assets = Equity + Liabilities\\Liablities = short\: term + long\: term`

Total Assets

cash 23,015

Account Receivables 141,258

Inventory 213,000

other current assets 11,223

PPE 714,100

goodwill and other assets 78,656

Total Assets 1,181,252

common stock 311,300

retained earnings 512,159

Total equity 823,459

We use he accounting equation to get total liabilities:

1,181,252 - 823,459 = 357,793 Total Liabilities

Now we calcualte the short-term debt

126,257 Account Payable

21,115 short-term Note Payable

Total Current Liabilities 147,372

And with this, the diference between short-term adn total liabilities is the long-term liabilities

357,793 - 147,372 = 210,421 Long-Term Liabilities