Betancourt International has operations in Arrakis. The balance sheet for this d

Question

Betancourt International has operations in Arrakis. The balance sheet for this division in Arrakeen solaris shows assets of 37,000 solaris, debt in the amount of 14,500 solaris, and equity of 22,500 solaris. Assume the equity increases by 2,800 solaris due to retained earnings.

Betancourt International has operations in Arrakis. The balance sheet for this division in Arrakeen solaris shows assets of 37,000 solaris, debt in the amount of 14,500 solaris, and equity of 22,500 solaris. Assume the equity increases by 2,800 solaris due to retained earnings.

Explanation / Answer

Note: When equty is issued, company receives cash so cash will increase with the same amount.

Blance sheet (Dollars) Assets Amount ($) Liabilities Amount ($) Cash (2,800 *$1.41) 3,948 Debt (14,500 * $1.41) 20,445 Assets (37,000 * $1.41) 52,170 Equity (22,500 * $1.41) 31,725 New issues (2,800 * $1.41) 3,948 Total assets 56,118 Total debt and equity 56,118

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