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grandymaker [24]
3 years ago
13

Bostian, Inc. has total assets of $660,000. Its total debt outstanding is $185,000. The Board of Directors has directed the CFO

to move towards a debt-to-assets ratio of 55%. How much debt must the company add or subtract to achieve the target debt ratio?
Business
1 answer:
RideAnS [48]3 years ago
6 0

Answer:

Company must add $178,000 more debt to achieve the target debt ratio

Explanation:

Debt to asset ratio = (Total outstanding liabilty / Total Assets) x 100

Current Debt to asset ratio = (185,000 / 660,000) x 100 = 28%

Target debt to asset ratio = 55%

According to given condition

55% = Total outstanding debt / 660,000

Total outstanding debt = 660,000 x 55%

Total outstanding debt = $363,000

Additional debt for taget debt to assets ratio = $363,000 - 185,000

Additional debt for taget debt to assets ratio = $178,000

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7 0
2 years ago
How would you check the accuracy of the opening balance of the most recent statement?
Trava [24]

Answer:

I think the answer is B verify last month

6 0
3 years ago
On October 1, Willette Company borrowed $120,000 cash and issued a six-month, 10% promissory note. Interest is payable at maturi
viktelen [127]

Answer:

Cash borrowed = $120,000

Interest on promissory note = 10%

The journal entry is as follows:

On December 31,

Interest expense A/c Dr.  $3,000.00

           To Interest payable                   $3,000.00

(To record interest accrued on note)

Working notes:

Interest expense:

= $120,000 × 10% × (3/12)

= $120,000 × 0.1 × (1/4)

= $3,000

3 0
3 years ago
As asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $
Arlecino [84]

Answer:

The after tax salvage value of the asset is $165.000.

Explanation:

If the asset has a depreciation period of 5 years it means that still there is a depreciation´s remanent of $ 1.280.000, if the asset it's sold at $1.530.000 at the end of the project, then the salvage value before taxes it's $250.000 consequently the after tax salvage value of the asset it's $ 165.000.

When company's asset it's for sale if there is yet a remanent value of depreciation it's the cost of sale of the transaction, if the depreciation it's zero then the sale it's a all gain to the company.

Please see details below:

Value of the Asset : $6.400.000

Anual Depreciation: $.1.280.000

Value of Sale:  $1.530.000

Cost of Sale : $1.280.000

Revenue : $250.000

Tax Rate:  - $85.000

Salvage value: $165.000

5 0
3 years ago
An investment fund has the following assets in its portfolio: $40 million in fixed-income securities and $40 million in stocks a
Aleksandr-060686 [28]

Answer:

Sells with 2 days:

$ 4,608,000

$6,144,000

Sells within 4 days

$4,704,000

$6,272,000

Explanation:

The computation sell of two days and four days is shown below:-

Sells with 2 days:

Value of fixed-income securities = $40,000,000 ×  0.96

= $38,400,000

Value of stock =$40,000,000 × 0.96

= $38,400,000

Total value = $76,800,000

Shareholder A gets from 6% of equity = $76,800,000 × 6%

= $ 4,608,000

Shareholder B gets from 8% of equity = $76,800,000 × 8%

= $6,144,000

Sells within 4 days

Value of fixed-income securities = $40,000,000 × 0.98

= $39,200,000

Value of stock =$40,000,000 × 0.98

= $39,200,000

Total value =$78,400,000

Shareholder A gets from 6% of equity = $78,400,000 × 6%

= $4,704,000

Shareholder B gets from 8% of equity = $78,400,000 × 8%

= $6,272,000

8 0
3 years ago
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