What does the debt to equity ratio

Reference no: EM131227973

ESSAY. Complete your work in a separate Word or Excel file and upload it to the assignment link in Blackboard.

1) Truesdell Brewery Company uses the direct method for its statement of cash flow. Assume Accrued Liabilities relate to Operating Expenses. It reports the following information regarding the year ending December 31, 2017:

Truesdell Brewery Company

Income Statement

For the Year Ended December 31, 2017

Sales Revenue $312,000

Cost of Goods Sold 247,000

Operating expenses 32,500

Net Income $32,500

Truesdell Brewery Company

Partial Balance Sheet

2017 2016

Accounts Receivable (net) $19,500 $15,600

Merchandise Inventory 23,400 28,600

Accrued Liabilities 1,560 3,900

Accounts Payable (Merchandise Inventory) 15,600 9,100

Assume that there were no sales of long-term assets, no interest revenue, and no expenses other than the expenses shown above. Also, assume that Accounts Payable is for purchases of merchandise inventory only. Prepare the operating activities section of the statement of cash flows.

2) Peterson, Inc. issued 4,000 shares of preferred stock for $240,000. The stock has a par value of $60 per share. Prepare the journal entry for this transaction.

3) Orange Office Supply Corporation completed the following stock issuance transactions:

Mar. 28	Issued 5,000 shares of $4 stated value common stock for cash of $20 per share
May 1	Received merchandise inventory with a market value of $46,000 in exchange for 2,000 shares of the $4 stated value common stock.
May 14	Issued 450 shares of 5%, $20 par value preferred stock for $50 per share

Prepare the journal entries to record these transactions. Explanations are not required.

4) What does the debt to equity ratio show, and how is it calculated?

5) Hernandez Carpets Company buys a building for $115,000, paying $30,000 cash and signing a 30-year mortgage note for $85,000 at 11%. Prepare the journal entry for the purchase.

6) List and discuss three ways in which the statement of cash flows helps financial statement users.

7) Johnson Tires Company uses the indirect method to prepare the statement of cash flows. Refer to the following comparative balance sheet for Johnson Tires Company and complete the third column to show the increases or decreases.

Johnson Tires Company

Comparative Balance Sheet

December 31, 2017 and 2016

Increase/

2016 2015 (Decrease)

Cash $39,600 $19,800

Accounts Receivable 26,400 38,500

Merchandise Inventory 204,000 126,500

Total Assets 270,000 184,800

Accounts Payable 4,800 6,600

Accrued Liabilities 2,400 1,100

Long-term Notes Payable 100,800 99,000

Total Liabilities 108,000 106,700

Common Stock 36,000 2,200

Retained Earnings 135,600 81,400

Treasury Stock (9,600) (5,500)

Total Stockholders' Equity 162,000 78,100

Total Liabilities and Stockholders' Equity $270,000 $184,800

8) Marketplace, Inc. completed the following treasury stock transactions in 2016:

June. 3 Purchased 2,000 shares of the company's $5 par value common stock as treasury stock, paying cash of $15 per share.

June 14 Sold 800 shares of the treasury stock for cash of $20 per share.

Journalize these transactions. Explanations are not required.

How will Marketplace, Inc. report treasury stock on its balance sheet as of December 31, 2016?

Reference no: EM131227973

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