Galan Associates prepared its financial statement for 2013 based on the information given here. The company had cash worth $1,234, inventory worth $13,480, and accounts receivables of $7,789. The company's net fixed assets are $42,331, and other assets are $1,822. It had accounts payables of $9,558, notes payables of $2,756, ordinary share capital of $22,000, and retained earnings of $14,008. How much long-term debt does the company have?

Question

Quizplus · Accepted Answer

To find the long-term debt of the company, we need to use the formula:
Total assets - Total liabilities = Shareholders' equity
Total liabilities = Total assets - Shareholders' equity

Total assets:
Cash = $1,234
Inventory = $13,480
Accounts receivables = $7,789
Net fixed assets = $42,331
Other assets = $1,822
Total assets = $66,656

Shareholders' equity:
Ordinary share capital = $22,000
Retained earnings = $14,008
Total shareholders' equity = $36,008

Total liabilities = $66,656 - $36,008 = $30,648

Total liabilities include:
Accounts payables = $9,558
Notes payables = $2,756
Long-term debt = Total liabilities - (Accounts payables + Notes payables)
Long-term debt = $30,648 - ($9,558 + $2,756)
Long-term debt = $18,334

Therefore, the company has long-term debt of $18,334. Option D is the correct answer.

Galan Associates Prepared Its Financial Statement for 2013 Based on the Information