Question : 6.The following the balance sheet of Able Corporation immediately prior : 1253574

 

6.The following is the balance sheet of Able Corporation immediately prior to deciding how to finance the purchase of a $300 addition to its building.

Able Corporation

Balance Sheet

December 31, 2010

Assets

Cash$   300

Accounts receivable260

Building390

Land    370

Total assets$1,320

Liabilities and Shareholders’ Equity

Accounts payable$   190

Long-term bonds payable              620

Contributed capital  340

Retained earnings    170

Total liabilities &shareholders’ equity              $1,320

 

The bonds payable contract agreement requires current assets to be twice as much as current liabilities. Assume the $300 addition to the building is to be paid in cash and financed by issuing more stock. Calculate and explain the maximum cash that Able can pay and still honor its debt agreement.

7.              What is the total amount owed to Ulrich by its customers at the end of 2010?

8.Calculate total expenses for Ulrich.

9.Calculate Ulrich’s total current assets.

10.How much must Ulrich pay out during its next accounting period for amounts owed?

11.Below is all of the account information from Chamber Company’s balance sheet, with the exception of Retained Earnings.

Cash$12,000

Inventory15,000

Equipment50,000

Accounts Payable17,000

Long-term Payable10,000

Contributed capital30,000

Using this information, please calculate the following:

A.The total amount of retained earnings for Chamber Company.

B.The total amount of shareholders’ equity for the company at the end in the year.

12.The following information is shown on Morris Company’s balance sheet. Answer the questions that follow.

 

Cash$12,000

Inventory15,000

Equipment50,000

Accounts Payable15,000

Bonds Payable30,000

Contributed capital20,000

A.How much did debt investors provide to Morris Company?

B.What is the amount of money provided by equity investors to Morris Company?

C.How much would be classified as property, plant, and equipment?

13.Autry Company determined its total sales were $380,000, salaries expense was $120,000, dividends paid were $8,000, rent expense was $14,000, other operating expenses were $20,000, and customers still owed $2,000 at the end of the year. How much is net income for the year?

14.If cash flows from operating activities were $3,000, cash outflows for financing activities were $2,500, and the net increase in cash was $5,000, how much are cash flows from investing activities?

15.The following is the balance sheet of Columbus Corporation immediately prior to deciding how to finance the purchase of an additional $200,000 parcel of land. Answer the question that follows.

Columbus Corporation

Balance Sheet

December 31, 2010

Assets

Cash$ 180,000

Accounts receivable60,000

Land270,000

Total assets$510,000

 

Liabilities and Shareholders’ Equity

Accounts payable  $  90,000

Contributed capital   250,000

Retained earnings170,000

Total liabilities &shareholders’ equity              $510,000

 

REQUIRED: Columbus will finance the $200,000 investment in land by issuing either $200,000 of common stock or using $200,000 of additional accounts payable that will be due in 90 days. Indicate which method of financing is preferable for Columbus. Consider the effects on short-term solvency positions.

 

 

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