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29 January, 21:21

James Smith, the CFO of Blossom 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 $311,000, retained earnings of $512,159, inventory of $210,000, goodwill and other assets equal to $78,656, net plant and equipment of $710,000, 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 Blossom Automotive?

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  1. 29 January, 22:29
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    Long term debt is $ 166,621

    Explanation:

    Firstly, we have to classify the available data into their correct headings.

    Assets

    Cash $ 23,015

    inventory $ 210,000

    Accounts Receivable $ 141,258

    Other current assets $ 11.223

    Plant and Equipment (Net) $ 710,000

    Goodwill and other assets $ 78,656

    Total Assets $ 1,174,152

    Liabilities

    Accounts Payable $ 163,257

    Short term notes payable $ 21,115

    Total liabilities without long term debt $ 184,372

    Stockholders equity

    Common stock $ 311,000

    Retained earnings $ 512,159

    Total Stockholders Equity $ 823,159

    By using the fundamental accounting equation which is

    Assets = Liabilities + Owners equity

    $ 1,175,152 = $ 184,372 + $ 823,159 = $ 166,621

    so the amount of long term debt is $ 166,621, this would balance the accounting equation.
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