Tumbling Haven, a gymnastic equipment manufacturer, provided the following information to its accountant. The company had current assets of $145,332, net fixed assets of $356,190, and other assets of $4,176. The firm has long-term debt of $76,445, common stock of $200,000, and retained earnings of $134,461. What amount of current liabilities does this firm have?

Question

Quizplus · Accepted Answer

To find current liabilities, we need to use the formula:
Current Assets - Other Assets = Current Liabilities + Long-term debt + Equity
Plugging in the numbers:
$145,332 - $4,176 = Current Liabilities + $76,445 + ($200,000 + $134,461)
$141,156 = Current Liabilities + $410,461
Current Liabilities = $141,156 - $410,461 = -$269,305
A negative value for current liabilities is not possible, so we made an error. We did not subtract net fixed assets from total assets to arrive at $505,698, which should be the answer.

The correct calculation would be: 
$505,698 - $76,445 - $200,000 - $134,461 - $356,190 = Current Liabilities
Current Liabilities = $94,792

Tumbling Haven, a Gymnastic Equipment Manufacturer, Provided the Following Information