Hondo Co has total debt of $252,000 and stockholders' equity of $420,000 . Hondo is seeking capital to fund an expansion. Hondo is planning to issue an additional $180,000 in common stock, and is negotiating with a bank to borrow additional funds. The bank requires a maximum debt ratio of .75 . What is the maximum additional amount Hondo will be able to borrow after the common stock is issued?
a. $639,000
b. $852,000
c. $1,236,000
d. $1,548,000
D
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Kevin, an employee of Sunbeam, Inc, has gross salary for May of $7,000
The entire amount is under the OASDI limit of $117,000 and thus subject to FICA. He is also subject to federal income tax at a rate of 20%. Which of the following is a part of the journal entry to record the disbursement of his net pay? (Assume a FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%.) A) debit to Cash for $5,064.50 B) credit to Cash for $5,064.50 C) debit to Employee Income Tax Payable of $5,064.50 D) debit to FICA Tax Payable of $5,064.50
The following income statement and balance sheets for The Sports Shack are provided.The Sports ShackIncome StatementFor the year ended December 31, 2021Sales revenue$6,600,000Cost of goods sold4,700,000Gross profit1,900,000 Expenses:? Operating expenses1,400,000 Depreciation expense100,000 Interest expense50,000 Income tax expense80,000 Total expenses1,630,000Net income $270,000The Sports ShackBalance SheetsDecember 31Assets20212020Current assets:?? Cash$218,000 $196,000 Accounts receivable680,000 880,000 Inventory1,250,000 1,100,000 Supplies90,000 65,000 Long-term assets:?? Equipment1,200,000 900,000 Less: Accumulated depreciation (350,000) (250,000) Total
assets$3,088,000 $2,891,000 Liabilities and Stockholders' EquityCurrent liabilities:?? Accounts payable$65,000 $55,000 Interest payable4,000 6,000 Income tax payable40,000 30,000 Long-term liabilities:?? Notes payable400,000 300,000 Stockholders' equity:?? Common stock900,000 900,000 Retained earnings 1,679,000 1,600,000 Total liabilities and equity$3,088,000 $2,891,000 Required:Assuming that all sales were on account, calculate the following risk ratios for 2021 (round to one decimal place).1. Receivables turnover ratio2. Average collection period3. Inventory turnover ratio4. Average days in inventory5. Current ratio6. Acid-test ratio7. Debt to equity ratio8. Times interest earned ratio What will be an ideal response?
A weaker dollar places ____ pressure on U.S. inflation, which in turn places ____ pressure on U.S. interest rates, which places ____ pressure on U.S. bond prices
a. upward; downward; upward b. upward; downward; downward c. upward; upward; downward d. downward; upward; upward e. downward; downward; upward
Which of the following is a tax deductible expense?
A) Repayment of the principle portion of a loan B) Dividends C) The purchase of inventory D) Depreciation