Arredondo, Inc., has current assets of $2,360, net fixed assets of $11,200, current liabilities of $1,445,

Arredondo, Inc., has current assets of $2,360, net fixed assets of $11,200, current liabilities of $1,445, and long-term debt of $4,170.

Requirement 1:

What is the value of the shareholders’ equity account for this firm? (Do not include the dollar sign ($).)

 

Shareholder's equity

$

Requirement 2:

How much is net working capital? (Do not include the dollar sign ($).)

 

Net working capital

$

 

Explanation:

The balance sheet for the company will look like this:

 

Balance sheet
Current assets	$	2,360	Current liabilities	$	1,445
Net fixed assets		11,200	Long-term debt		4,170
			Owner's equity		7,945
Total assets	$	13,560	Total liabilities & Equity	$	13,560

The owner's equity is a plug variable. We know that total assets must equal total liabilities & owner's equity. Total liabilities and equity is the sum of all debt and equity, so if we subtract debt from total liabilities and owner's equity, the remainder must be the equity balance, so:

 

Owner’s equity = Total liabilities & equity – Current liabilities – Long-term debt

Owner’s equity = $13,560 – 1,445 – 4,170

Owner’s equity = $7,945

 

Net working capital is current assets minus current liabilities, so:

 

NWC = Current assets – Current liabilities

NWC = $2,360 – 1,445

NWC = $915