Which of the following is an example of debt financing? Select answer from the options below A company raised $50,000 by selling stocks to investors. A company raised $50,000 by selling finished goods to customers. A company raised $50, 000 by selling services to customers. A company raised $50,000 by selling bonds to investors.

Which of the following is an example of debt financing? Select answer from the options below A company raised $50,000 by selling stocks to investors. A company raised $50,000 by selling finished goods to customers. A company raised $50, 000 by selling services to customers. A company raised $50,000 by selling bonds to investors.

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter14: Long-term Liabilities: Bonds And Notes

Section: Chapter Questions

Problem 1PEA

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Read the following case and then use your knowledge, skills and critical thinking to answer the questions below: You are hired to work as an accountant at African Company which has an active trading strategy for debt investments. African Company engaged in purchasing and selling several debt investments to make profits. On December 31, 2018, the company had 3 debt investments as follows: Egyptian Company 7% Bonds, the amortized cost is $310,000. Tunisia Company 8% Bonds, the amortized cost is $525,000. Morocco Company 6% Bonds, the amortized cost is $415,000. If the market values of Egyptian Company, Tunisia Company, and Morocco Company debt investments on December 31, 2018, were, $304,000, $538,000, $413,000, respectively. Required 1: Prepare the debt investments portfolio for African Company on December 31, 2018, and prepare the adjusting entry on the date? Required 2: Assume that African Company sold Tunisia Company 8% Bonds on April 1, 2019 for $519,000 at that time the amortized…
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Ring & Bell Bhd. has prepared the next year's pro forma balance sheet which shows the external financing needed (EFN) of RM100,000. To bring the pro forma balance sheet into balance, Ring & Bell should __________. Select one: a. invest in marketable securities totalling RM100,000 b. repurchase common stock totalling RM100,000 c. repay notes payable of RM100,000 d. borrow long-term capital of RM100,000
Clayton Industries has the following account balances: Current assets Noncurrent assets $ 22,000 Current liabilities 74,000 Noncurrent liabilities Stockholders' equity $ 9,000 51,000 36,000 The company wishes to raise $35,000 in cash and is considering two financing options: Clayton can sell $35,000 of bonds payable, or it can issue additional common stock for $35,000. To help in the decision process, Clayton's management wants to determine the effects of each alternative on its current ratio and debt-to-assets ratio. Required a-1. Compute the current ratio for Clayton's management. Note: Round your answers to 2 decimal places. Currently If bonds are issued If stock is issued Current Ratio to 1 to 1 to 1 a-2. Compute the debt-to-assets ratio for Clayton's management. Note: Round your answers to 1 decimal place. Currently If bonds are issued If stock is issued Debt to Assets Ratio % % % b. Assume that after the funds are invested, EBIT amounts to $14,900. Also assume the company pays…
The liabilities and owners’ equity for Campbell Industries is found here. What percentage of the firm’s assets does the firm now finance using debt (liabilities)? If Campbell were to purchase a new warehouse for $1.4 million and finance it entirely with long-term debt, what would be the firm’s new debt ratio?
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please show your answer with workings and explanation.
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