Question

BUHLER INDUSTRIES INC Statement of Financial Position (partial) September 30, 2021 (in thousands) ASSETS Current assets Accounts receivable $33,142 Income tax receivable $263 Inventory $156,406 Prepaid expenses $8,247 Total current assets $198,058 Non-current assets Long-term other receivables and other assets $5,259 Investments $6,254 Property, plant, and equipment Land $2,281 Buildings $26,610 Less: Accumulated depreciation - buildings $19,737 Equipment $58,410 Less: Accumulated depreciation - equipment $54,139 Computer equipment $7,229 Less: Accumulated depreciation - computer equipment $6,426 Total property, plant, and equipment $14,137 Total assets $223,708

          BUHLER INDUSTRIES INC
Statement of Financial Position (partial) September 30, 2021 (in thousands)

ASSETS
Current assets
Accounts receivable $33,142
Income tax receivable $263
Inventory $156,406
Prepaid expenses $8,247
Total current assets $198,058

Non-current assets
Long-term other receivables and other assets $5,259
Investments $6,254
Property, plant, and equipment
Land $2,281
Buildings $26,610
Less: Accumulated depreciation - buildings $19,737
Equipment $58,410
Less: Accumulated depreciation - equipment $54,139
Computer equipment $7,229
Less: Accumulated depreciation - computer equipment $6,426
Total property, plant, and equipment $14,137

Total assets $223,708

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buhler industries inc statement of financial position partial september 30 2021 in thousands assets current assets accounts receivable 33142 income tax receivable 263 inventory 156406 prepai 70579

Added by Lacey J.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Supreeta N

09/06/2023

Step 1

The total current assets can be calculated by adding up the individual current assets: Accounts receivable + Income tax receivable + Inventory + Prepaid expenses = $33,142 + $263 + $156,406 + $8,247 = $198,058 Show more…

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BUHLER INDUSTRIES INC Statement of Financial Position (partial) September 30, 2021 (in thousands) ASSETS Current assets Accounts receivable $33,142 Income tax receivable $263 Inventory $156,406 Prepaid expenses $8,247 Total current assets $198,058 Non-current assets Long-term other receivables and other assets $5,259 Investments $6,254 Property, plant, and equipment Land $2,281 Buildings $26,610 Less: Accumulated depreciation - buildings $19,737 Equipment $58,410 Less: Accumulated depreciation - equipment $54,139 Computer equipment $7,229 Less: Accumulated depreciation - computer equipment $6,426 Total property, plant, and equipment $14,137 Total assets $223,708

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Transcript

00:01 Hello students, in this question we have to say by what amount roe will change.

00:05 So, here first of all we need to compute the current ratio.

00:08 So, current ratio is current asset divided by current liability.

00:11 So, it is 294000 divided by 70 ,000.

00:16 So, it will come out to 4 .20.

00:18 Then average industry average current ratio is industry average current ratio is 3 .40.

00:24 It means it has reduced.

00:27 We need to reduce the current ratio from 4 .20 to 3 .20.

00:30 To do this well, we sell off inventories and not replace them.

00:34 So, sell off inventories.

00:38 The value of inventories here are is 210000.

00:42 So, reduction in current asset will be reduction in current asset will be of 2 ,10 ,000.

00:52 Now, let's calculate new current ratio.

00:56 So, it is new current asset will be total current asset minus reduction inventory.

01:07 So, it is current asset worth 294000 minus 2 ,10 ,000.

01:13 So, it will be 84 ,000.

01:18 So, now new current ratio will be 84 ,000 divided by 70 ,000.

01:26 So, it will come out to 1 .20.

01:31 So, to increase the current ratio from 1 .20 to 3 .40, we need to reduce the current liabilities as well.

01:37 So, from 1 .20 to 3 .40, we need to decrease the liability as well...

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