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:

Critical

Pertaining to a crucial or decisive point that requires immediate attention or presents a significant challenge.

Competition

The rivalry between businesses to sell their goods or services to customers, often leading to better quality and prices.

Environmental Change

Alterations to the natural environment caused by human activity or natural processes, impacting ecosystems, climate, and land use.

Small Business

A privately owned and operated business, usually characterized by small number of employees and modest revenue.