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15 April, 09:56

Orem Corporation's current liabilities are $116,160, its long-term liabilities are $474,240, and its working capital is $162,600. If the corporation's debt-to-equity ratio is 0.24, total long-term assets must equal Chegg a $2.460,000 b $2,287640 c $2.887,800 d $2,771,640

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  1. 15 April, 09:57
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    Total long-term assets must equal: d $2,771,640

    Explanation:

    Orem Corporation's Total Debt (liabilities) = current liabilities + long-term liabilities = $116,160 + $474,240 = $590,400

    Debt-to-equity ratio = Total Debt/Total Equity

    Total Equity = Total Debt/Debt-to-equity ratio = $590,400/0.24 = $2,460,000

    Working capital = Current assets - Current abilities

    Current assets = Working capital + Current abilities = $162,600 + $116,160 = $278,760

    Basing accounting equation:

    Total assets = Current assets + Long-term assets = Total liabilities + Total Equity = $590,400 + $2,460,000 = $3,050,400

    Long-term assets = Total assets - Current assets = $3,050,400 - $278,760 = $2,771,640
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