If the company s total assets are equal to a market value of $1 214 000 (book value of

QUESTION

The Ellicott City Ice Cream Company management has just completed an assessment of the company”s assets and liabilities and has obtained the following information. The firm has total current assets worth $625,000 at book value and $519,000 at market value. In addition, its long-term assets include plant and equipment valued at market for $695,000, while their book value is $940,000. The company”s total current liabilities are valued at market for $543,000, while their book value is $495,000. Both the book value and the market value of long-term debt is $350,000. If the company”s total assets are equal to a market value of $1,214,000 (book value of $1,565,000), what are the book value and market value of its stockholders” equity?
Solution: Book Value Market Value Total current assets $ 625,000 $ 519,000 Fixed assets $ 940,000 $ 695,000 Total assets $ 1,565,000 $ 1,214,000 less: Total current

abilities $ 495,000 $ 543,000 Long-term debt $ 350,000 $ 350,000 Stockholders equity $ 720,000 $ 321,000

ANSWER:

CLICK REQUEST FOR  AN EXPERT SOLUTION