Question

Problem 2-15 Balance Sheet (LG2-1) Brenda's Bar and Grill has total assets of $27.0 million, of which $21.0 million are current assets. Cash makes up 10 percent of the current assets and accounts receivable makes up another 40 percent of current assets. Brenda's gross plant and equipment has a book value of $20.5 million and other long-term assets have a book value of $800,000. What is the balance of inventory and the balance of depreciation on Brenda's Bar and Grill's balance sheet? (Enter your answer in millions of dollars rounded to 1 decimal place.) & Answer is complete but not entirely correct. Inventory 10,500,000.0 8 million Depreciation 42 700 000 0 % million

Answer 1

Notes: Amount should be entered million dollars means $10.5 million not $10,500,000 million so please considered this.

Solution:
	Inventory	10.5	million
	Depreciation	15.3	million
Working Notes:
	Total current assets = Inventory + Cash + Accounts receivable
	current assets = Inventory + (10% of current assets ) + (40% of current assets)
	$21.0 million = Inventory + (10% x $21.0 million ) + (40% x $21.0 million)
	$21.0 million = Inventory + $2.10 million + $8.4 million
	Inventory = $21.0 million - $2.10 million - $8.4 million
	Inventory = $10.5 million
	Depreciation in balance sheet shown are accumulated depreciation that is the depreciation charged till that date of balance sheet.
	Total assets = Current assets + Fixed assets
	Total assets = Current assets + Depreciable fixed assets + non depreciating fixed assets
	$27.0 million = $21.0 million +Plant and Equipment book value + $0.80 million
	$27.0 million - $21.0 million - $0.80 million= Plant and Equipment book value
	Net Plant and Equipment book value = $5.2 million
	Gross plant and equipment book value - Depreciation = Net Book value of Plant and Equipment
	$20.5 million - Depreciation = $5.2 million
	Depreciation = $20.5 million - $5.2 million
	Depreciation = $15.3 million
Please feel free to ask if anything about above solution in comment section of the question.