Question

David Davis, the CFO of Pharoah 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 $314,000, retained earnings of $512,159, inventory of $211,200, goodwill and other assets equal to $78,656, net plant and equipment of $711,800, 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 Pharoah Automotive have

Answer 1

$166,621

Step-by-step explanation:

Long term debt refers to all the debt and loans that a company has to repay in a period of time longer than one year. All the debt payments that are due within one year are called current debt.

Assets:

cash balance of $23,015

accounts receivable of $141,258

inventory of $211,200

other current assets of $11,223

net plant and equipment of $711,800

goodwill and other assets equal to $78,656

Total assets = $1,177,152

Liabilities and stockholders' equity

accounts payable of $163,257

short-term notes payable of $21,115

common stock of $314,000

retained earnings of $512,159

Total liabilities and stockholders' equity = $1,010,531

Difference between assets and liabilities + equity = $1,177,152 - $1,010,531 = $166,621 that should correspond to long term debt.