Answer:
a. Current assets = $1,800,000
b. Shareholders' equity = $1,000,000
c. Noncurrent assets = $1,000,000
d. Long-term liabilities = $1,000,000
Step-by-step explanation:
a. Current assets
Current liabilities = Inventories / (Current ratio - Acid-test ratio) = $840,000 / (2.25 - 1.2) = $800,000
Since Current assets / Current liabilities = 2.25 = Current ratio, therefore, we have:
Current assets = Current ratio * Current liabilities = 2.25 * $800,000 = $1,800,000
b. Shareholders' equity
Debt to equity ratio = Total liabilities / Shareholders' equity = 1.8
Total liabilities = (1.8 * Shareholders' equity)
Total assets = $2,800,000
Total assets = Total liabilities + Shareholders' equity ………….. (1)
Substituting all the relevant values into equation (1) and solve for Shareholders' equity, we have:
$2,800,000 = (1.8 * Shareholders' equity) + Shareholders' equity
$2,800,000 = (1.8 + 1) * Shareholders' equity
$2,800,000 = 2.8 * Shareholders' equity
Shareholders' equity = $2,800,000 / 2.8 = $1,000,000
c. Noncurrent assets
Noncurrent assets = Total assets - Current assets = $2,800,000 - $1,800,000 = $1,000,000
d. Long-term liabilities
Long-term liabilities = Total assets - Current liabilities - Shareholders' equity = $2,800,000 - $800,000 - $1,000,000 = $1,000,000