Beau is the owner of Beau's Bakery. He is concerned that his business is becoming too highly geared. Given the figures below for the past two years, calculate the level of gearing and advise Beau of your findings. (round to the nearest 2 decimals) 2021 Total Liabilities Owner's Equity $60 000 $93 500 Debt to Equity = (Total Liabilities) + (Owner's Equity) * 100 2020 $48 000 $85 000 % 2021 % 2020

Beau is the owner of Beau's Bakery. He is concerned that his business is becoming too highly geared. Given the figures below for the past two years, calculate the level of gearing and advise Beau of your findings. (round to the nearest 2 decimals) 2021 Total Liabilities Owner's Equity $60 000 $93 500 Debt to Equity = (Total Liabilities) + (Owner's Equity) * 100 2020 $48 000 $85 000 % 2021 % 2020

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Santana Rey has consulted with her local banker and is considering financing an expansion of her business by obtaining a long-term bank loan. Selected account balances at March 31, 2022, for Business Solutions follow. Total assets $121,568 Total liabilities $862 Total equity $120,706 Required:1. The bank has offered a long-term secured note to Business Solutions. The bank’s loan procedures require that a client’s debt-to-equity ratio not exceed 0.77. As of March 31, 2022, what is the maximum amount that Business Solutions could borrow from this bank? (Round your intermediate calculations to the nearest dollar amount.)2. Assume Business Solutions borrows the maximum amount allowed from the bank. (Round your intermediate dollar values to the nearest whole number and final answers to 1 decimal place.)(a) What percentage of assets would be financed by debt?(b) What percentage of assets would be financed by equity?
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2 Use Redlands’ 2020 balance sheet from Exhibit 2-1 in your Bergevin and MacQueen textbook as the starting point for this problem. Assume that Redlands had the following transactions in 2021: Borrowed $80 in cash from a bank at the beginning of 2021. Received $50 cash from the 2020 consulting engagement. Paid $30 cash for the 2020 operating expenses. Earned $60 in consulting revenue for 2021—collected one-half of the revenue in cash. Incurred $35 of operating expenses in 2021—paid $20 of the operating expenses in cash. Recorded 2021 depreciation expense of $15 on the equipment purchased in 2020. Paid $8 of interest for the $80 cash borrowed at the beginning of 2021. Now, use the Session 2 Comprehensive Problem Excel File from above to complete the tables for2021: Record the transactions in the general journal. Post the entries to the ledger (Note that the 2021 beginning balances in each account have already been entered for you, where appropriate). Construct a trial balance.…
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Santana Rey has consulted with her local banker and is considering financing an expansion of her business by obtaining a long-term bank loan. Selected account balances at March 31, 2020, for Business Solutions follow. Total assets $121,568 Total liabilities $862 Total equity $120,706 Required:1. The bank has offered a long-term secured note to Business Solutions. The bank’s loan procedures require that a client’s debt-to-equity ratio not exceed 0.77. As of March 31, 2020, what is the maximum amount that Business Solutions could borrow from this bank? 2. Assume Business Solutions borrows the maximum amount allowed from the bank. (a) What percentage of assets would be financed by debt?(b) What percentage of assets would be financed by equity?