Following is the balance sheet of XYZ Company. Because XYZ has $900,000 of retained earnings, do you think that the company would be able to pay cash to buy an asset with a cost of $525,000? Why or why not? Give logical arguments to support your answer.

Cash $ 50,000 Accounts payable $ 100,000

Inventory 300,000 Accruals 100,000

Accounts receivable 250,000 Total CL $ 200,000

Total CA $ 600,000 Debt 200,000

Net fixed assets $ 900,000 Common stock 200,000

_________ Retained earnings 900,000

Total assets $1,500,000 Total L & E $1,500,000