Debt totalliabilities 5200035000 87000

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Unformatted text preview: e Increase Decrease Decrease Increase N/A Increase (7) Retained Earnings Increase No effect Decrease No effect Increase No effect Increase E12–2 a. Debt = Total Liabilities = $52,000 + $35,000 = $87,000 Contributed Capital Earned Capital = Preferred Stock + Common Stock + Additional Paid­In Capital, Preferred Stock + Additional Paid­In Capital, Common Stock – Treasury Stock = $50,000 + $80,000 + $50,000 + $100,000 – $80,000 = $200,000 = Retained Earnings = $113,000 The portions of Lamont's assets provided by debt, contributed capital, and earned capital are, therefore, 21.75%, 50%, and 28.25%, respectively. b. = = = = Debt/Equity c. Debt/Equity Total Liabilities ÷ Stockholders' Equity Total Liabilities ÷ (Contributed Capital + Earned Capital) $87,000 ÷ ($200,000 + $113,000) .278 = Total Liabilities ÷ Total Stockholders' Equity = (Total Liabilities + Contributed Preferred Capital) ÷ (Contributed Common Capital + Earned Capital – Treasury Stock) = ($87,000 + $50,000 + $50,000) ÷ ($80,000 + $100,000...
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