Tutorial 1 - 200 Beg. 300 Beg. 2,000 (a) 200 End. 2,300...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
E1–3. L (1) Notes payable to banks A (10) Machinery and equipment E (2) General and administrative R (11) Net sales L (3) Accounts payable A (12) Inventories L (4) Dividends payable E (13) Marketing, selling, and advertising SE (5) Retained earnings A (14) Buildings A (6) Cash and cash equivalents A (15) Land A (7) Accounts receivable L (16) Income taxes payable E (8) Provision for income taxes* E (17) Distribution and warehousing costs E (9) Cost of goods sold A (18) Investments (in other companies) *Note that “Provision for income taxes” is a common synonym for “Income tax expense.”
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
E2–13. Req. 1 Assets $ 7,500 = Liabilities $ 500 + Stockholders’ Equity $ 7,000 Req. 2 Cash Short-Term Investments Beg. 3,000 Beg. 2,000 Beg. 2,500 (a) 2,000 1,000 (b) 1,250 (c) (b) 1,000 (c) 1,250 300 (d) End. 6,950 End. 1,000 End. 1,250 Short-Term Notes Payable Long-Term Notes Payable
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 200 Beg. 300 Beg. 2,000 (a) 200 End. 2,300 End. Contributed Capital Retained Earnings 5,000 Beg. 2,000 Beg. (d) 300 5,000 End. 1,700 End. Req. 3 Assets $ 9,200 = Liabilities $ 2,500 + Stockholders Equity $ 6,700 Req. 4 Financial = Average Total Assets = ($7,500+$9,200) / 2 = $8,350 = 1.22 Leverage Average Stockholders Equity ($7,000+$6,700) / 2 $6,850 This ratio indicates that, for every $1 of equity investment, Massimo maintains $1.22 of assets. Massimos ratio is lower than the industry average of 2.00, indicating that Massimo maintains a lower debt level and follows a less risky financing strategy than does the average firm in the industry. As such, Massimo can finance expansion by borrowing without taking on excessive debt compared to the industry average....
View Full Document

Page1 / 2

Tutorial 1 - 200 Beg. 300 Beg. 2,000 (a) 200 End. 2,300...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online