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The following December 31, 2021, fiscal year-end account balance information is available for the Stonebridge Corporation: Cash and cash equivalents $ 6,100 Accounts receivable (net) 31,000 Inventory 71,000 Property, plant, and equipment (net) 175,000 Accounts payable 50,000 Salaries payable 22,000 Paid-in capital 155,000 The only asset not listed is short-term investments. The only liabilities not listed are $41,000 notes payable due in two years and related accrued interest of $1,000 due in four months. The current ratio at year-end is 1.5:1. Required: Determine the following at December 31, 2021:

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  1. Today, 05:40
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    Answer and Explanation:

    1. Total current assets

    As we know that

    Current ratio = Current assets : current liabilities

    Current liabilities is

    = Accounts payable + Accrued interest + Salaries payable

    = $50,000 + $1,000 + $22,000

    = $73,000

    And,

    Current ratio = 1.5:1

    So,

    Total current assets is

    = 1.5 * $73,000

    = $109,500

    b. Short term investment is

    Short term investment = Total current assets - Cash and cash equivalents - Accounts receivables - Inventories

    = $109,500 - ($6,100 + $31,000 + $71,000)

    = $1,400

    c. Now retained earning is

    Total assets

    = Total current assets + Property, plant and equipment

    = $109,500 + $175,000

    = $284,500

    Total liabilities is

    = Current liabilities + Notes payable

    = $73,000 + $41,000

    = $114,000

    Retained earnings is

    = Total assets - Total liabilities - Paid in capital

    = $284,500 - $114,000 - $155,000

    = $15,500
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