Answer: See explanation
Step-by-step explanation:
a. What is the company’s total debt?
The company's total debt is the addition of the notes payable of $155,000, and the long-term debt of $747,000. This will be:
= $155,000 + $747,000
= $902000
b. What is the amount of total liabilities and equity that appears on the firm’s balance sheet?
Since the firm has total assets of $2.9 million and in a balance sheet, assets must be equal to the liabilities, then the total liabilities and equity = $2.9 million
c. What is the balance of current assets on the firm’s balance sheet?
Total assets:
= Current assets + Net plant and equipment
2.9 million= Current asset + 2.4 million
Current asset = 2.9 million - 2.4 million
= 0.5 million
= $500,000
d. What is the balance of current liabilities on the firm’s balance sheet?
Total liabilities and equity:
= Current liabilities + Long-term debt + Total common equity
2.9 million= Current liabilities + $747000 + $1,450,000
Current liabilities = 2,900,000 - 2,197,000
Current liabilities= $703,000
e. What is the amount of accounts payable and accruals on its balance sheet? (Hint: Consider this as a single line item on the firm’s balance sheet.)
Accounts payable and accruals = Current liabilities - Notes payable
Accounts payable and accruals = $703,000 - $155,000
= $548,000
f. What is the firm’s net working capital?
Net working capital = Current assets - Current liabilities
= $500,000 - $703,000
= -$203,000
g. What is the firm’s net operating working capital?
Net operating working capital:
= Current assets - (Current liabilities - Notes payable)
= $500,000 - ($703,000 - $155,000)
= $500000 - $548000
= $48,000
h. What is the explanation for the difference in your answers to parts f and g?
= $203,000 - $48,000
= $155,000
The difference between (f) and (g) is the note payable balance.