The Owner of Fred's Electronics Is Trying to Sell the Business

question 316

Multiple Choice

The owner of Fred's Electronics is trying to sell the business. The company built a building four years ago at a cost of $2.2 million. The building is currently appraised at $2.46 million. The firm's
Equipment originally cost $1.2 million and is currently valued at $700,000. The inventory is listed on
The statement of financial position at $150,000 but is only worth $125,000. The owner expects to
Collect 90 percent of the $300,000 in accounts receivable. The firm has $14,000 in cash and has
Total debt of $3.1 million. What is the market value of this firm?

• A) $455,000
• B) $469,000
• C) $499,000
• D) $504,000
• E) $524,000

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Definitions:

Debits And Credits

Fundamental accounting principles that are used to record every financial transaction, where debits must equal credits in every transaction.

Account Type

A classification system used within accounting to differentiate between the various financial transactions, assets, liabilities, and owners' equity carried out or held by a business.

Increases

Refers to the growth or rise in numbers, values, quantities, or activities.

Decreases

A reduction in size, quantity, or level of something.