Question

The current asset section of the Excalibur Tire Company’s balance sheet consists of cash, marketable securities, accounts receivable, and inventories. The December 31, 2016, balance sheet revealed the following:

Inventories $ 1,200,000
Total assets $ 4,800,000
Current ratio 2.10
Acid-test ratio 1.30
Debt to equity ratio 1.5

Required:
Determine the following 2016 balance sheet items:
1. Current assets
2. Shareholders' equity
3. Noncurrent assets
4. Long-term liabilities

Answer 1

The 2016 current asset's account balance = $3,150,000,
the shareholder's equity account balance = $1,920,000,
the noncurrent asset's account balance = $1,650,000, and
the Long-term liabilities account balance = $1,380,000.

This problem solved using one linear equation with one variable and one linear equation with two different variables. The one linear problem used for determining the shareholder's equity and the total liabilities. The rest solved by using one linear equation with two different variables this equation formed by using each of the ratio formulae.