Jones Enterprises was started when it acquired $7,200 cash from creditors and $8
ID: 2331527 • Letter: J
Question
Jones Enterprises was started when it acquired $7,200 cash from creditors and $8,800 from owners. The company immediately purchased land that cost $11,000.
Required
Record the events under an accounting equation.
After all events have been recorded, Jones’s obligations to creditors represent what percent of total assets?
After all events have been recorded, Jones’s stockholders’ equity represents what percentage of total assets?
Assume the debt is due. Given that Jones has $8,800 in stockholders’ equity, can the company repay the creditors at this point?
Record the events under an accounting equation. (Enter any decreases to account balances with a minus sign.
Record the events under an accounting equation. (Enter any decreases to account balances with a minus sign.)
After all events have been recorded, Jones’s obligations to creditors represent what percent of total assets? After all events have been recorded, Jones’s stockholders’ equity represents what percentage of total assets? Assume the debt is due. Given that Jones has $8,800 in stockholders’ equity, can the company repay the creditors at this point?
Pllease typewrite your answers , no handwritten responses please. Thank you.
Record the events under an accounting equation. (Enter any decreases to account balances with a minus sign.)
JONES ENTERPRISES Accounting Equation Cash + Land = Creditors + Stockholders’Equity + = + + = + Bal. $0 + $0 = $0 + $
Explanation / Answer
Answer (a)
JONES ENTERPRISES
Accounting Equation
Cash + land=Creditors+ Stockholder’s Equity
$5,000 +$11,000 =$7,200 + $8,800
Total Assets = Total liabilities
$16,000 = $16,000
(b) Percentage of creditor to total assets= Creditor/ Total assets*100
=$7,200/$16,000*100
=45%
(c) Percentage of Stockholder’s Equity to total assets= Stockholder’s Equity / Total assets*100
=$8,800/$16,000*100
= 55%
(d)At this time company has cash balance for $5,000 and creditors balance require to pay is $7,200, so cash is short for payment to creditor. Company cannot pay full to creditors.
JONES ENTERPRISES
Accounting Equation
Cash + land=Creditors+ Stockholder’s Equity
$5,000 +$11,000 =$7,200 + $8,800
Total Assets = Total liabilities
$16,000 = $16,000
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