Question

Tumbling Haven, a gymnastic equipment manufacturer, provided the following information to its accountant. The company had net fixed assets of $25 million, and other non-current assets of $2 million. The firm has current liabilities of $2 million, long-term debt of $10 million, common stock of $3 million, and retained earnings of $25 million. What amount of current assets did this firm have

Answer 1

See below

Step-by-step explanation:

Given the information above,

Total asset = Current asset + Net fixed assets + Other non current assets

= Current asset + $25m + $2m

= Current asset + $27m

= Long term debt + equity

= 10m + $3m + $25m

= $38m

Current liabilities = $2m

Since current liabilities = Total asset - (long-term debt + equity)

$2m = (current asset + $27m) - $38m

$2m = current asset + $27m - $38m

Current asset = $2m - $27m + $38m

Current asset = $13m