Question
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
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 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Auditing A Business Risk Approach
Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg
8th edition
538476230, 978-0538476232
