The current asset section of the Excalibur Tire Company’s balance sheet consists of cash, marketable securities, accounts receivable, and inventory. The December 31, 2021, balance sheet revealed the following: Inventory $890,000
Total assets $3,500,000
Current ratio 2.40
Acid-test ratio 1.40
Debt to equity ratio 1.5
Required:Determine the following 2016 balance sheet items:1. Current assets2. Shareholders' equity3. Non-current assets4. Long-term liabilities

1. Current assets $2,136,000

2. Shareholders' equity $2,000,000

3. Non-current assets $1,364,000

4. Long term liabilities = $610,000

Explanation:

Calculation to determine the following 2016 balance sheet items: Current assets, Shareholders' equity, Non-current assets and Long-term liabilities

1. Current assets

First step is to calculate the Acid test ratio using this formula

Acid test ratio = (Current assets-Inventory)/Current liabilities

Let plug in the formula

1.40 = (2.40X-$890,000)/X

1.40X = 2.40X-$890,000

-1.00X = $890,000

X=$890,000/1.00

X = $890,000

Now let calculate the Current assets

Current assets =$ 890,000*2.4

Current assets = $2,136,000

Therefore Current assets will be $2,136,000

2. Shareholders' equity

Using this formula

Total assets = Debt+Equity

Let plug in the formula

$3,500,000 = 1.5X+X

X = $2,000,000

Therefore Shareholders' equity will be $2,000,000

3 .Non-current assets

Long term assets = $3,500,000- $2,136,000

Long term assets = $1,364,000

Therefore Non-current assets will be $1,364,000

4. Long-term liabilities

Long term liabilities =[($3,500,000-$2,000,000)-$890,000]

Long term liabilities =$1,500,000-$890,000

Long term liabilities = $610,000

Therefore Long term liabilities will be $610,000