Question

Sharpshooter Productions needs help checking the accuracy of their balance sheet. The firm reports the following:

Cash and marketable securities= $201,660.00 Goodwill and other assets= $84,450.00
Accounts payable= $82,995.00 Net fixed assets =$461,640.00
Common stock= $100,000.00 Notes payables= $68,735.00
Retained Earnings= $526,140.00 Long-term debt = ?????
Accounts Receivable= $291,865.00 Inventory= $122,165.00

What is the long-term debt for Sharpshooter for the financials to be correct?

Answer 1

To find the long-term debt for Sharpshooter Productions, we need to ensure that the accounting equation holds true, which is:

\[
\text{Assets} = \text{Liabilities} + \text{Equity}
\]

### Step 1: Calculate Total Assets

Total Assets can be calculated by summing all asset accounts:

1. Cash and marketable securities = $201,660.00
2. Accounts Receivable = $291,865.00
3. Inventory = $122,165.00
4. Net Fixed Assets = $461,640.00
5. Goodwill and other assets = $84,450.00

\[
\text{Total Assets} = 201,660 + 291,865 + 122,165 + 461,640 + 84,450
\]

\[
\text{Total Assets} = 1,162,780.00
\]

### Step 2: Calculate Total Liabilities

Total liabilities consists of accounts payable, notes payable, and long-term debt:

1. Accounts payable = $82,995.00
2. Notes payables = $68,735.00
3. Long-term debt = \(L\) (this is the unknown we need to find)

\[
\text{Total Liabilities} = 82,995 + 68,735 + L
\]

\[
\text{Total Liabilities} = 151,730 + L
\]

### Step 3: Calculate Total Equity

Total equity can be calculated using common stock and retained earnings:

1. Common stock = $100,000.00
2. Retained Earnings = $526,140.00

\[
\text{Total Equity} = 100,000 + 526,140
\]

\[
\text{Total Equity} = 626,140.00
\]

### Step 4: Set Up the Accounting Equation

Now we set up the equation based on what we have calculated:

\[
\text{Total Assets} = \text{Total Liabilities} + \text{Total Equity}
\]

Substituting the values we have:

\[
1,162,780 = (151,730 + L) + 626,140
\]

### Step 5: Solve for Long-Term Debt (L)

\[
1,162,780 = 151,730 + L + 626,140
\]

Combine the constants on the right side:

\[
1,162,780 = 777,870 + L
\]

Now isolate \(L\):

\[
L = 1,162,780 - 777,870
\]

\[
L = 384,910
\]

### Conclusion

The long-term debt for Sharpshooter Productions is **$384,910.00**.