Nike relied on creditors versus stockholders for financing

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Reference no: EM13878941

NIKE, Inc., with headquarters in Beaverton, Oregon, is one of the world's leading manufacturers of athletic shoes and sports apparel. The following activities occurred during a recent year. The amounts are presented in millions of dollars.

a. Purchased $ 216 in equipment; paid by signing a $ 5 long- term note and fulfilling the rest with cash.

b. Issued $ 21 in additional common stock for cash contributions made by stockholders.

c. Several NIKE investors sold their own stock to other investors on the stock exchange for $ 110 per share of stock.

Required:

1. For each of these events, perform transaction analysis and indicate the account, amount (in millions), and direction of the effect on the accounting equation. Check that the accounting equation remains in balance after each transaction. Use the following headings:

2. Explain your response to transaction (c).

3. Did these transactions change the extent to which NIKE relied on creditors versus stockholders for financing? Explain.

Reference no: EM13878941

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