Exercise 3–19
1. Debt to equity ratio = Total liabilities ÷ Shareholders’ equity = 1.4
Shareholders’ equity × 1.4 = Total liabilities
Total liabilities + Equity = Total assets
Total assets – Long-term assets = Current assets
Current ratio = Current assets ÷ Current liabilities
2.0 = $3,600,000 ÷ Current liabilities
2. Total assets = Total liabilities + Shareholders’ equity
Total assets = Current liabilities + Long-term liabilities + Shareholders’ equity
3. Current assets = Cash + Accounts receivable + Prepaid expenses
4. Acid-test ratio = Quick assets ÷ Current liabilities
Quick assets = Cash + Accounts receivable
Exercise 3–20
Current Acid-test Debt to
Action Ratio Ratio Equity Ratio
1. Issuance of long-term bonds I I I
2. Issuance of short-term notes I I I
3. Payment of accounts payable D D D
Exercise 3–21
Requirement 1
The pharmaceuticals, plastics, and farm equipment segments are reportable.
Requirement 2
For segments determined to be reportable, the following disclosures are
required:
a. General information about the operating segment.
b. Information about reported segment profit or loss, including certain revenues
c. Reconciliations of the totals of segment revenues, reported profit or loss, assets,
Exercise 3–22
Problem 3–1
Name of Company
Current assets:
Cash
PROBLEMS
Investments:
Property, plant, and equipment:
Intangible assets:
Liabilities and Shareholders’ Equity
Current liabilities:
Long-term liabilities:
Shareholders’ equity:
Problem 3–2
Requirement 1
Inventories:
Current assets – Cash and cash equivalents – Short-term investments –
Accounts receivable – Prepaid expenses = Inventories
Total assets:
Total liabili&es + Shareholders’ equity = Total assets
Property and equipment (net):
Total assets – Current assets – Long-term receivables = Property and
equipment
Accounts payable:
Total current liabili&es – Notes payable and short-term debt
– Accrued liabili&es – Other current liabili&es = Accounts payable
Long-term debt and deferred taxes:
Total liabili&es – Current liabili&es = Long-term debt and deferred taxes
Problem 3–2 (concluded)
Requirement 2
TRIDENT CORPORATION
Balance Sheet
At December 31, 2018
Assets
($ in thousands)
Current assets:
Cash and cash equivalents ………………………. $ 239,186
Investments:
Property and equipment (net)…………………….. 621 ,040
Liabilities and Shareholders’ Equity
Current liabilities:
Notes payable and short-term debt …………… $ 31,116
Accounts payable ……………………………………. 59,072
Long-term debt and deferred taxes …………….. 262 ,576
Shareholders’ equity ………………………………….. 1 ,370,627
Problem 3–3
ALMWAY CORPORATION
Balance Sheet
At December 31, 2018
Assets
Current assets:
Inventories …………………………………………………………………….. 200,000
Investments:
Marketable securi&es ……………………………………………………… $ 30,000
Land held for sale …………………………………………………………… 25,000
Property, plant, and equipment:
Land ………………………………………………………………………………. 65,000
Intangible assets:
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable ……………………………………………………………. $ 75,000
Long-term liabilities:
Notes payable ………………………………………………………………… $ 90,000
Shareholders’ equity:
Common stock, no par value; 500,000 shares
authorized; 100,000 shares issued and outstanding ………… 300,000