Rudy Company Has Total Assets, Liabilities, and Shareholders' Equity of $28,000

question 51

Multiple Choice

Rudy Company has total assets, liabilities, and shareholders' equity of $28,000, $21,000, and $7,000, respectively. Assume no material change occurred during the year to totals on the balance sheet. What amount of long-term debt must Rudy exchange for new shares of common stock issued in order to decrease its debt/equity ratio to 1.0?

• A)$17,500
• B)$7,000
• C)$14,000
• D)$21,000

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Definitions:

Concentrated Liquid

Refers to a solution that has a high proportion of solute compared to its solvent, often requiring dilution before use.

Pre-Mixed Version

A product offered in a form that is ready for use or consumption without the need for further mixing or preparation.

Pharmaceutical Company

A business entity focused on the research, development, and manufacturing of drugs and medications for medical treatment.

Extra-Large Accounts

Extra-Large Accounts refer to customer accounts that represent a significantly high volume of sales or revenue for a company, often requiring special management and strategies.