Question 10
Understanding how accounts relate to each other (questions 10 – 13):
The managers of Moreton, Inc. prepared the following summaries of their company’s assets and liabilities (amounts are in € millions):
|
31/12/x2 |
31/12/x1 |
Current assets |
|
|
Cash |
140 |
20 |
A/R |
50 |
70 |
Inventories |
118 |
93 |
Noncurrent assets |
|
|
Equipment, net |
260 |
300 |
Total assets |
568 |
483 |
Liabilities |
|
|
Accounts payable |
101 |
80 |
Owners’ Equity |
|
|
Share capital |
250 |
250 |
Retained profits |
217 |
153 |
Total liabilities & OE |
568 |
483 |
An analysis of the company’s cash account for x2 shows three main transactions (amounts also in € millions): (1) amount received from customers: 500; (2) amount paid to suppliers for merchandise: 330; (3) amount of dividends declared and paid: 50. All sales and purchases are on credit. (Hint: Use T-accounts)
Compute sales revenues in x2: