Examlex

Solved

Justin Company Has Total Assets, Liabilities, and Shareholders' Equity of $36,000

question 10

Essay

Justin Company has total assets, liabilities, and shareholders' equity of $36,000, $15,000, and $21,000, respectively, at the beginning of 2010. At the end of 2010, total assets, liabilities, and shareholders' equity were reported at $32,000, $13,000, and $19,000, respectively. How much additional debt can Justin Company incur and still have its debt/equity ratio remain less than or equal to 1.00?
a. $6,000
b. $25,000
c. $12,000
d. $24,000


Definitions:

Uniform Commercial Code

A comprehensive set of laws governing all commercial transactions in the United States, intended to standardize and make uniform the regulations across the states.

Inventory Purchasing

The process of acquiring goods and materials that a company intends to sell in its normal business operations.

Sporting Goods Store

A retail business specializing in the sale of sports equipment and related items for various physical activities and sports.

Lump-sum

A one-time payment executed at a specific moment, rather than several payments spread out over a period.

Related Questions