Question

William Brown, the CFO of Oriole 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 $213,100, goodwill and other assets equal to $78,656, net plant and equipment of $710,100, 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 Oriole Automotive have?

Answer 1

$169,521

Explanation:

The computation of long-term debt is shown below:-

Total asset = Cash + Inventory + Goodwill + Net plant and equipment + Receivables + Current assets

= $23,015 + $213,100 + $78,656 + $710,100 + $141,258 + $11,223

= $1,177,352

Long-term debt = Total asset - Account payable - Common stock - Retained earnings - Short term notes

= $1,177,352 - $163,257 - $311,300 - $512,159 - $21,115

= $169,521

Hence, we have applied the above formula for determining the long term debt.