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Suppose the following items were taken from the balance sheet of Nike, Inc. (All dollars are in millions.)

1. Cash $2,367.7
2. Accounts receivable 2,959.6
3. Common stock 2,943.1
4. Notes payable 332.0
5. Buildings 3,847.5
6. Mortgage payable 1,020.9
7. Inventory $2,357.8
8. Income taxes payable 80.3
9. Equipment 1,610.4
10. Retained earnings 6,346.1
11. Accounts payable 2,420.6

Perform each of the following. (All dollars are in millions.)
(a) Classify each of these items as an asset, liability, or stockholders’ equity and determine the total dollar amount for each classification.

Assets
Cash
Accounts receivable
Inventory
Equipment
Buildings
Total assets
Liabilities
Notes payable
Accounts payable
Mortgage payable
Income taxes payable
Total liabilities
Stockholders' Equity
Common stock
Retained earnings
Total stockholders' equity

(b) Determine Nike’s accounting equation by calculating the value of total assets, total liabilities, and total stockholders’ equity. (Enter amounts in millions up to 1 decimal place, e.g. 45.5 million.)

Respuesta :

Answer:

Explanation:

The categorization is shown below:

1. Cash $ = Assets

2. Accounts receivable =  Assets

3. Common stock = stockholders’ equity

4. Notes payable = liability

5. Buildings   = Assets

6. Mortgage payable   =  liability

7. Inventory = Asset

8. Income taxes payable = Liability

9. Equipment = Asset

10. Retained earnings = Stockholder equity

11. Accounts payable = Liability

Now the amount for each classification is

Assets

Cash    $2,366.7

Accounts receivable  $2,959.6

Inventory  $2,357.80

Equipment  $1,610.4

Buildings  $3,847.50

Total assets  $13,142

Liabilities

Notes payable  $332

Accounts payable  $2,420.60

Mortgage payable  $1,020.90

Income taxes payable  $80.3

Total liabilities  $3,853.8

Stockholders' Equity

Common stock   $2,943.1

Retained earnings  $6,346.1

Total stockholders' equity $9,289.20

b. Total assets = Total liabilities + Shareholder equity

$13,142 = $3853.8 + $9,289.2

chilljain33

The correct way to classify the items will be as under:-

(A)

Assets - Cash, accounts receivable, buildings, inventory, equipment.

Liabilities - Notes payable, mortgages payable, accounts payable, Income Taxes payable.

Stockholder's equity - Common Stock and retained earnings.

(B)

Total assets = $13,142.

Total liabilities= $3853.8

Stockholder's equity= $9289.20

Classification of Classes

  • The correct computation of the Assets can be done using simple summation, as under,

  • [tex]\rm Total\ Assets= Cash\ +Accounts\ Receivable\ +Buildings\ + Inventory\ + Equipment\\\\\\\\\\\rm Total\ Assets(in\ \$)\ = 2366.7 + 2959.6\ + 3847.5\ + 2357.8\ + 1610.4\\\\\\\rm Total\ Assets= \$\ 13142[/tex]

  • Similarly, the liabilities can be calculated as,

  • [tex]\rm Total\ Liabilities= 332\ + 1020.9\ + 80.3\ + 2420.6\\\\\\\rm Total\ Liabilities= \$ 3853.8[/tex]

  • And the Stockholder's Equities as,

  • [tex]\rm Stockholder's\ Equities= 2943.1\ + 6346.1\\\\\\\rm Stockholder's\ Equities= \$ 9289.2[/tex]

Hence, the classification of items are computed as above into total assets, total liabilities and stockholder's equities.

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