The assets of Dallas & Associates consist entirely of current assets and net plant equipment. The firm has total assets of $2.5 million and net plant and equipment equals $2 million. It has notes payable of $150,000, long-term debt of $750,000, and total common equity of $1.5 million. The firm does have accounts payable and accruals on its balance sheet. The firm only finances with debt and common equity, so it has no preferred stock on its balance sheet.What is the balance of current liabilities on the firm's balance sheet?

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Asked Jan 19, 2019
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The assets of Dallas & Associates consist entirely of current assets and net plant equipment. The firm has total assets of $2.5 million and net plant and equipment equals $2 million. It has notes payable of $150,000, long-term debt of $750,000, and total common equity of $1.5 million. The firm does have accounts payable and accruals on its balance sheet. The firm only finances with debt and common equity, so it has no preferred stock on its balance sheet.
What is the balance of current liabilities on the firm's balance sheet?

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Expert Answer

Step 1

As given in the question, Total assets of the business is $ 2500,000 (i.e. $ 2.5 millions).

The Total assets of the business is always equal to Total liabilities and equities of the business. Therefore, Total of liabilities and equities is also equal to $ 2500,000.

From which, the stockholder's equity shall be deducted to arrive at the figure of Total li...

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