Question

Assume the following year end estimates: Current liabilities = $20 million Long term debt = $80...

Assume the following year end estimates:

Current liabilities = $20 million

Long term debt = $80 million

Deferred tax liabilities = $10 million

Beginning retained earnings = $30 million

Dividend payments for the year = $5 million

Preferred shareholder equity $15 million

Capital stock = $25 million

Additional paid in capital = $100 million

Revenues = $200 million

Expenses including tax = $150 million

What is the best estimate of total assets?

I know the answer is $325 million, but I want to understand the work. Thank you.

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Homework Answers

Answer #1

Total Assets = Total liabilities + Shareholder's fund

= $110  million + $ 215  million

= $325  million

Total liabilities = Current liabilities + Long term liabilities

= Current liabilities + Deferred tax liabilities + Long term debt

= 20 million + 10 million +80 million

= 110 million

Shareholder's fund = Capital stock + Preferred shareholder equity + Additional paid in capital + Retained earnings at end (Beginning retained earnings - Dividend payments for the year + Revenues- Expenses including tax )

= 25 million + 15 million + 100 million + (30 million - 5 million + 200  million - 150 million)

= 215  million

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