Chapter 2 Homework Solutions

Chapter 2 Homework Solutions - Chapter 2 Homework Solutions...

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Unformatted text preview: Chapter 2 Homework Solutions M2–3. (1) Y; (2) N; (3) Y; (4) N; (5) N; (6) Y. M2–5. Assets = Liabilities + Stockholders’ Equity a. Cash +1,000 Notes payable +1,000 b. Cash +3,000 Contributed capital +3,000 c. Cash Equipment –100 +500 Notes payable +400 d. Cash –100 Retained earnings –100 e. Cash –200 Notes receivable +200 M2–9. Cash Notes Receivable Equipment Beg. 1,000 Beg. 1,000 Beg. 16,300 (a) 1,000 100 (c) (e) 200 (c) 500 (b) 3,000 100 (d) 200 (e) 4,600 1,200 16,800 Notes Payable Contributed Capital Retained Earnings 3,000 Beg. 5,500 Beg. 9,800 Beg. 1,000 (a) 3,000 (b) (d) 100 400 (c) 4,400 8,500 9,700 M2–11. Financial = Average Total Assets = ($245,600+$278,100) / 2 = $261,850 = 1.62 Leverage Average Stockholders’ Equity ($155,300+$167,900) / 2 $161,600 This ratio indicates that, for every $1 of equity investment, Fullem maintains $1.62 of assets. Fullem’s ratio is lower than Papa John’s 2003 ratio (of 2.54), indicating that Fullem maintains a lower debt level and follows a less risky financing strategy than does Papa John’s. E2–5. Req. 1 Assets = Liabilities + Stockholders’ Equity a. Buildings Equipment Cash +182.0 +21.9 – 48.1 Long-term note payable +155.+155....
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This note was uploaded on 04/09/2008 for the course BUSACC 0030 taught by Professor Stevenonaitis during the Spring '08 term at Pittsburgh.

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Chapter 2 Homework Solutions - Chapter 2 Homework Solutions...

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