Chapter 2, Problem 2.2SDC

Requirement – 1

To determine

The amounts in accounting equation of Company H and Company L, and also explain which company has larger amount of total assets.

Requirement – 2

To determine

Todiscuss: Whether Company L have more or less current liabilities than Company H, and also explain which company has a larger current ratio.

Requirement – 3

To determine

To discuss: Whether cost of inventory represents the selling price of Company L or not.

Requirement – 4

To determine

Whether the assets amount of Company L is primarily come from liabilities or stockholders’ equity, and also determine the percentage of total assets to the total liabilities for each company.