Q1

A Senario 1.

Plant and Equipment 2,000,000

Current Asset 500,000

Total Asset 2,500,000

Notes Payable 150,000

Long Term Debt 750,000
Common Equity 1,500,000
Accounts Payable and Accruals 100,000

Total Liability 2,500,000

1 Company's Total Debt

Notes Payable 150,000
Long Term Debt 750,000
Accounts Payable and Accruals 100,000

1,000,000

2 Total Liabilties and Equity on B/S

Notes Payable 150,000
Long Term Debt 750,000
Common Equity 1,500,000
Accounts Payable and Accruals 100,000

2,500,000

3 Balance Of Current Assets on B/S

Current Asset
Total Assets 2,500,000
Less: Plant and Equipment (2,000,000)

500,000

4 Balance Of Current Libilities on B/S

Notes Payable 150,000
Accounts Payable and Accruals 100,000

250,000
5 Amount of accounts payable and accruals on B/S
Total Liability 2,500,000
Less=(Notes Payable+Long Term Debt+Common Equity) (2,400,000)
 100,000

6 Net Working Capital of the Firm

Current Assets - Current Liabilities
Current Assets 500,000
Less:Current Liabilities
a. Notes payable (150,000)
a. Accounts payable and Accruals (100,000)

250,000

7 Net operating working capital of the firm

Current Operating Assets-Current Operating Liabilities
Current Operating Assets (Cash+A/R+Inventories)
Current Asset 500,000

Less:Current Operating Liabilities(A/P + Accrued Expenses) (100,000)

400,000

While calulating Net working capital, we consider all the Current assets
whereas, for Net operating Working Capital, we consider only Cash, A/R
8 and Inventories. Same is the cae with Liabilities. We do not consider Notes
Payable and other Liabilities(Except A/P and Accruals) while calculating
Net operating Working Capital.

B Senario 1.

Plant and Equipment 3,000,000

Current Asset 1,000,000

Total Asset 4,000,000

Notes Payable 500,000

Long Term Debt 950,000
Common Equity 2,000,000
Accounts Payable and Accruals ( Other Current Liabilities) 50,000
Prefered Stock 500,000

Total Liability 4,000,000

1 Company's Total Debt

Notes Payable 500,000
Long Term Debt 950,000
 Accounts Payable and Accruals ( Other Current Liaabilities) 50,000

1,500,000

2 Total Liabilties and Equity on B/S

Notes Payable 500,000
Long Term Debt 950,000
Common Equity 2,000,000
Accounts Payable and Accruals ( Other Current Liabilities) 50,000
Prefered Stock 500,000

4,000,000

3 Balance Of Current Assets on B/S

Current Asset
Total Assets 4,000,000
Less: Plant and Equipment (3,000,000)

1,000,000

4 Balance Of Current Libilities on B/S

Notes Payable 500,000
Accounts Payable and Accruals ( Other Current Liabilities) 50,000

550,000

5 Amount of accounts payable and accruals on B/S

Total Liability 4,000,000
Less=(Notes Payable+Long Term Debt+Common Equity,
(3,950,000)
Preferded Stock)

50,000

Q2
Q3

Statements (b) and (d) will decrease the amount of cash on a company's balance sheet. Statement (a)
will increase cash through the sale of common stock. Selling stock provides cash through financing
activities. On one hand, Statement (c) would decrease cash; however, it is also possible that Statement
(c) would increase cash, if the firm receives a tax refund for taxes paid in a prior year.
Q4

Statement showing Stockholder's equityBeginning balance of Common Stock capital90000Add: Issue of

Stock during the year (100000-90000)10000100000Add: Retained earnings balanceBeginning balance of
RE38774Add: Net income earned (57605-38774)1883157605Total Stockholder's equity157605

Q5