Consider the balance sheet of Wilkes Industries as shown below. Because Wilkes h
ID: 2693533 • Letter: C
Question
Consider the balance sheet of Wilkes Industries as shown below. Because Wilkes has $800,000 of retained earnings, the company would be able to pay cash to buy an asset with a cost of $200,000. Cash $50,000 Accounts payable $100,000Inventory $200,000 Accruals $100,000Accounts receivable $250,000 Total CL $200,000Total CA $500,000 Debt $200,000Net fixed assets $900,000 Common stock $200,000 Retained earnings $800,000Total assets $1,400,000 Total L & E $1,400,000. Advise the options to buy or not to buy?Explanation / Answer
Cash $ 50,000 Accounts payable $ 100,000
Inventory 200,000 Accruals 100,000
Accounts receivable 250,000 Total CL $ 200,000
Total CA $ 500,000 Debt 200,000
Net fixed assets $ 900, 000 Common stock 200,000
Retained earnings 800,000
Total assets $ 1,400,000 Total L & E $ 1,400,000
Answer is False
Answer is b . False