Question

Bear Tracks, Inc., has current assets of $2,270, net fixed assets of $10,300, current liabilities of $1,400, and long-term debt of $4,080.

What is the value of the shareholders’ equity account for this firm? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Shareholders' equity            $

How much is the company's net working capital? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Net working capital            $

Answer 1

a.The accounting equation is:

Assets= Liabilities + Shareholder’s equity

Total assets= Current assets + Net fixed assets

                   = $2,270 + $10,300

                  = $12,570

Total Liabilities= Current liabilities + Long term debt

                        = $1,400 + $4,080

                        = $5,480

$12,570= $5,480 + Shareholder’s equity

Shareholder’s equity= $12,570 - $5,480

= $7,090.

b.Net working capital= Current Assets – Current Liabilities

                                  = $2,270 - $1,400

                                  = $870

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