Question

ter 3 The Balance Sheet and Fina... 6 Saved Help Save & Exit Submit Check my work Exercise 3-18 (Static) Calculating ratios; solve for unknowns (LO3-8) The current asset section of the Excalibur Tire Company's balance sheet consists of cash, marketable securities. accounts receivable, and inventory. The December 31, 2021, balance sheet revealed the following: eBook Inventory Total assets Current ratio Acid-test ratio Debt to equity ratio $ 840,000 $2,800,000 2.25 Print eferences Required: Determine the following 2021 balance sheet items: 1. Current assets 2. Shareholders' equity 3. Long-term assets 4. Long-term liabilities PT URS e ir rce < Prey 3 of 5 HII Next >

Answer 1

$1,800,000 Answer 1 Current Assets 2 Shareholders' Equity $1,000,000 $1,000,000 $1,000,000 3 Long-term Assets 4 Long-term Liabilities Explanati 1 Acid-Test Ratio = Quick Assets / Current Liabilities = 1.20 Quick Assets = Current Assets - Inventories Quick Assets = Current Assets - $840,000 Current Assets / Current Liabilities = 2.25 (Current Assets - $840,000) / Current Liabilities $840,000 / Current Liabilities = 1.20 = 1.05 Current Liabilities = $800,000 Current Assets / $800,000 = 2.25 Current Assets = $1,800,000

2 Debt to equity Ratio = Total Liabilities / Shareholders' Equity = 1.8 Total Liabilities + Shareholders' Equity = Total Assets Total Liabilities + Shareholders' Equity = $2,800,000 %3! Let x Equal Shareholders' Equity 1.8 x +x = $2,800,000 x = $1,000,000 = Shareholders' Equity 3 Noncurrent Assets = Total Assets -Current Assets Noncurrent assets = $2,800,000 - 1,800,000 = $1,000,000 !! 4 Long-term Iliabilities = Total assets - Current liabilities - Shareholders' Equity Long-term liabilities = $2,800,000 - 800,000 -1,000,000 = $1,000,000