Busi293.Assignment1.Solution.Summer2012

Theagreementiniinvolvesnoexchangeorreceiptofcashgoods

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Unformatted text preview: ) Req. 4 (22 marks) Injection Plastics Company Statement of Financial Position As at December 31, 2012 Liabilities Current Liabilities $ 7,000 Trade payables 11,000 Accrued liabilities 3,000 Notes payable 24,000 Total Current Liabilities 45,000 Non­current Liabilities Notes payable Total Liabilities 8,000 Shareholders’ Equity 65,000 Share capital 115,000 Retained earnings 6,000 Total Shareholders’ Equity Total Liabilities and $239,000 Shareholders’ Equity Assets Current Assets Cash $ 15,000 Investments 2,000 Trade receivables 26,000 Inventories 43,000 Total Current Assets 64,000 Non­current Assets 107,000 Notes receivable Equipment 102,000 Factory building 30,000 Intangibles 132,000 Total Assets $239,000 Req. 5 (3 marks) Debt‐to‐Equity = Total Liabilities = $107,000 = 0.81 Ratio Shareholders’ Equity $132,000 This ratio indicates that, for every $1 of equity investment, Injection Plastics has used approximately $0.81 of debt to finance its assets. Alternatively, every $1 of assets is financed by ap...
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