FIN504.R.GitmanCh01.02_DFreiberg.xlsx - Meredith Harper...

This preview shows page 1 - 3 out of 10 pages.

The preview shows page 1 - 3 out of 10 pages.
Meredith Harper Invested 25kCompany filed BK and owes $60k in debtsA)B)C)Sole Proprietorship owned by M. H.. She would owe the full debt of $60k, Due to the unlimitedliability that exists within a sole proprietorship. The liabilities of the business are theresponsibility of the owner.50-50 partnership between M.H. and C.B.. She would owe $30k of the $60k in debts. Based onthe 50-50 partnership. Due to the unlimited liability within a partnership, the liabilities are theresponsibility of the of all the partners.Corporation. She would owe $0 of the $60k. Due to the limited liability in a corporation theshareholders (investors) are not liable for the debts of the corporation.
Cash FlowsJane moniters her cahs flow one a monthHas a savings accountBank loans money at 6% per yearShort term investment rates at 5%ItemCash InflowCash OutflowClothes$1,000.00Interest received$45,000.00Dinning out$500.00Groceries$800.00Salary$4,500.00Auto Payment$355.00Utilities$280.00Mortgage$1,200.00Gas$222.00A)Cash Inflows = $450+$4500= $4,950.00Cash Outflows = $1000+$500+$800+$355+$280+$1200+$222=$4,357.00B)Net Cash Flow = Cash Inflow - Cash Outflow= $4980-$4357=$593.00C)D)No shortage. However, if their was Jane could put the shortageon a credit card or withdrawal from her savings accountSince there is a surplus, the prudent strategy for Jane would beto either save the surplus or invest in ashort term investmentthrough her bank at 5%.0

Upload your study docs or become a

Course Hero member to access this document

Upload your study docs or become a

Course Hero member to access this document

End of preview. Want to read all 10 pages?

Upload your study docs or become a

Course Hero member to access this document

Term
Spring
Professor
ProfessorWhite

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture