Exhibit 21-13 Refer to Exhibit 21-13. What dollar amounts go in blanks (M)and (N), respectively?

Question

Exhibit 21-13 ​  Refer to Exhibit 21-13.  What dollar amounts go in blanks (M)and (N), respectively?

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From Exhibit 21-13, we can see that the total revenue for the year is $300 (A). The cost of goods sold is $200 (B), leaving a gross profit of $100 (C). The operating expenses are $70 (D), leaving an operating profit of $30 (E). Finally, the interest expense is $5 (F), leaving a net profit of $25 (G).

We are asked to find the amounts for blanks (M) and (N). We can see that (M) is the total liabilities, which is the sum of current liabilities and long-term liabilities. From Exhibit 21-13, we know that the current liabilities are $100 (H) and the long-term liabilities are $130 (J). Therefore, the total liabilities are $100 + $130 = $230.

To find (N), we need to use the accounting equation: assets = liabilities + equity. We already know the liabilities ($230) and equity ($145 from K). Therefore, we can solve for assets:

assets = liabilities + equity
assets = $230 + $145
assets = $375

Therefore, (N) is $375 - which means that the total assets for the company are $375.

The answer is (C) $230; $125.

Exhibit 21-13 ​ Refer to Exhibit 21-13

Exhibit 21-13 Refer to Exhibit 21-13