1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
jolli1 [7]
3 years ago
12

Thrillville has $39.5 million in bonds payable. One of the contractual agreements in the bond is that the debt to equity ratio c

annot exceed 2.0.Thrillville’s total assets are $80.7 million, and its liabilities other than the bonds payable are $10.7 million. The company is considering some additional financing through leasing.
Required:
1. Calculate total stockholders' equity using the balance sheet equation. (Enter your answer in millions rounded to 1 decimal place. (i.e., $5,500,000 should be entered as 5.5).)
2. Calculate the debt to equity ratio. (Enter your answer in millions. (i.e., $5,500,000 should be entered as 5.5). Round ratio answer to 2 decimal places.)
3. The company enters a lease agreement requiring lease payments with a present value of $15.7 million. Record the lease. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Enter your answer in millions (i.e., $5,500,000 should be entered as 5.5.).)
Business
1 answer:
Lyrx [107]3 years ago
4 0

Answer:

1. Stockholders' equity = $30.5 million;

2. Debt-to-equity ratio = 1.65

3. See explanation

Explanation:

1. Stockholders' equity calculation:

We know, according to the balance sheet equation,

Total Assets = Total liabilities + Stockholders' equity

Given,

Total Assets = $80.7 million

Total liabilities = Current liabilities + long-term liabilities

Total liabilities = $10.7 million + $39.5 million

Total liabilities = $50.2 million.

Therefore, total stockholders' equity = Total assets - Total liabilities

Total stockholders' equity = $80.7 million - $50.2 million

Total stockholders' equity = $30.5 million.

2. We know,

Debt-to-equity ratio = \frac{Total debt}{Total stockholders' equity}

When a company seeks to measure its financial leverage, that company uses debt-to-equity ratio. It also suggests that how much capital contributed by the creditors.

From requirement 1, we get,

Total liabilities = $50.2 million.

Total stockholders' equity = $30.5 million.

Therefore, Debt-to-equity ratio = \frac{50.2}{30.5}

Debt-to-equity ratio = 1.65

3. The journal entry to record the lease agreement -

Debit   Lease account         $15.7 million

Credit  Lease liability                         $15.7 million

(when the company enters into the lease agreement)

You might be interested in
The risk that a central bank will not make the necessary transfer of foreign currency to complete a currency settlement is known
motikmotik

Answer:

Herstatt.

Explanation:

The risk that a central bank will not make the necessary transfer of foreign currency to complete a currency settlement is known as herstatt risk.

Herstatt risk is also known as cross-settlement risk or settlement risk. It was named after Bankaus Herstatt (a German bank) that failed in June 1974 when it was supposed to settle a contract for a payment received from the other party and consequently, amounting to a loss of about $602,000,000.

Hence, is mainly a loss in foreign exchange transactions where a party defaults after receiving money from another.

4 0
3 years ago
All of the following statements concerning shortage are true, EXCEPT: Group of answer choices
mariarad [96]

Answer:

The correct answer is letter "C": shortage costs increase as total carrying costs increase.

Explanation:

A shortage takes place when the quantity demanded is higher than the supply at the current price. Typically, shortages occur because of an increase in demand, a decrease in supply or due to government policies. Shortage costs are those costs a firm is responsible for because the is no enough stock in its inventory. When shortage costs increase, the carrying costs do not necessarily increase.

6 0
3 years ago
How do u win from the stocks.
dimaraw [331]
You can buy at a low price for a stock and sell it for a higher price.
4 0
3 years ago
Semi-Salt Industries began its operation in 1975 and remains the only firm in the world that produces and sells commercial-grade
Airida [17]

Answer

The answer and procedures of the exercise are attached in the following archives.

Step-by-step explanation:

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.  

8 0
3 years ago
Any agreement should, as a part of the services provided, allow your organization to __________ your disaster recovery plan. Sel
eimsori [14]

Answer:

The correct answer is A. Test.

Explanation:

A test is different from an experiment: Before performing a test, there is an expected result. The test is performed to show this result. In an experiment, the result is open. Very often, tests are performed as part of an experiment.

8 0
3 years ago
Other questions:
  • You are managing a portfolio of $1 million. Your target duration is 10 years, and you can choose from two bonds: a zero-coupon b
    9·1 answer
  • Use the ________ or _______ property to clear a float
    12·1 answer
  • Which of the following describes an effective strategy for protecting yourself against identity theft?
    8·1 answer
  • In a _______, the majority of a nation’s land, factories, and other economic resources are privately owned by individuals or bus
    12·1 answer
  • When Acme Dynamite produces 250 units of output, its variable cost is $2,000, and its fixed cost is $500. It sells each unit of
    12·1 answer
  • At which stage of advertising is the customer motivated to take action?
    14·1 answer
  • The purchase of inventory for cash will cause the current ratio to decrease. true false
    15·1 answer
  • Due to path dependence:_____
    10·1 answer
  • Which of the following statements about theoretical capacity is BEST? A. Theoretical capacity allows adjustments for preventive
    6·1 answer
  • According to the Florentine humanist, Leonardo Bruni, history should be studied first (after a mastery of Latin grammar) because
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!