Question

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?

Answer 1

Answer:

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.