Sunset Roofing Inc. has total owners' equity of $37,948. The firm has current assets of $19,422, current liabilities of $13,021 and total assets of $86,428.
What is the value of the long-term debt?
The long-term debt represents the amount that a company owes to its creditors and is required to repay the same after a period of one year which may extend to many years as agreed upon. The long-term debt comprises of bank borrowings, long-term notes payable, debt instruments like bonds, debentures, etc.
Answer and Explanation:
The value of Sunset Roofing Inc's long-term debt is $35,459.
Sunset Roofing Inc. has shared the following information:
- Total assets = $86,428
- Current liabilities = $13,021
- Total owner's equity = $37,948
As per the balance sheet equation:
- Owners' equity = Total assets - Total liabilities
- Total liabilities = $86,428 - $37,948
- Total liabilities = $48,480
And, as we know that total liabilities is the sum of long-term debt and the current liabilities, hence:
- Total liabilities = Current liabilities + Long-term debt
- Long-term debt = Total liabilities - Current liabilities
- Long-term debt = $48,480 - $13,021
- Long-term debt = $35,459
Become a member and unlock all Study Answers
Try it risk-free for 30 daysTry it risk-free
Ask a question
Our experts can answer your tough homework and study questions.Ask a question Ask a question
Learn more about this topic:
from Financial Accounting: Help and ReviewChapter 8 / Lesson 7