Question

Balance Sheet Brenda's Bar and Grill has total assets of $15 million, of which $5 million are current assets. Cash makes up 10 percent of the current assets and accounts receivable makes up another 40 percent of current assets. Brenda's gross plant and equipment has a book value of $11.5 million, and other long- term assets have a book value of $500,000. Using this information, what is the balance of inventory and the balance of depreciation on Brenda's Bar and Grills balance sheet? (LG2-1) 2-15 interme PrOD

Answer 1

Total assets = 15 million

Current assets = 5 million

Non current assets = 15 million - 5 million i.e 10 million

Other long term assets = 0.50 million

Value of PPE = Gross book value of PPE - Depreciation

9.50 million = 11,50 million - Depreciation

Depreciation = 2 million

Current assets = 5 million

Cah = 10 % of current assets i.e 5 million * 10%

= 0.50 million

Accounts receivable = 40% of current assets i.e 5 million * 40%

= 2 million

Inventory = Total assets - Cash - Accounts Receivable

= 5 million - 0.50 million - 2 million

= 2.50 million