Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 105.7C
To determine
Debt to Total asset Ratio:
Debt to total asset ratio is the relationship between the Total liabilities and Total Assets of a corporation. Debt to total asset ratio shows the part of assets financed by debts. It is calculated by dividing total liabilities by total assets. The formula of debt ratio is as follows:
To discuss:
The debt management of Under Armour Inc. and Columbia Sportswear.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Reporting liabilities on the balance sheet and computing debt to equity ratio
The accounting records of Pack Leader Wireless include the following as of December 31, 2018:
Requirements
Report these liabilities on the Pack Leader Wireless balance sheet, including headings and totals for current liabilities and long-term liabilities.
Compute Pack Leader Wireless’s debt to equity ratio- at December 31,2018.
For Solar Industries and its related but separate
financing company Solar Financing Corp.
Required:
a. Calculate the debt to equity ratio for 2019
and 2020. (Round the final answers to 2
decimal places.)
Solar Industries (in millions) Solar Financing Corp (in millions)
2020
2019
2020
2019
Total Debt (A)
43,550
37,400
89,460
77,152
Total Equity (B)
21,202
24.655
9,170
8,154
2.06
1.52
9.76
9.47
MSI Inc -(ALL ENTRIES FOR MSI ONLY)
KEY for Accounting Component
Assets = A
Liabilities = L
Stockholders' Equity = SE
Accounting
Component
On July 1st 2019, MSI Inc issued $800,000, 3%, 10 year bonds at 103. The bonds pay interest annually. Prepare the
Debit (DR)
Credit (CR)
Account
3
journal entry to record the issuance of the bonds. What is the total cost of borrowing?
TOTAL COST OF BORROWING =
On January 1st 2020, MSI Inc issues $500,000 4%, 6 year bonds at face value. Prepare the entry to record the
issuance of the bonds.
On December 31st 2020, MSI Inc does an adjusting entry to record the accrual of interest for #4 above.
On January 1st, 2020, MSI pays the accrued bond interest and calls the bonds at 101 (refer to #4 above). Record the
payment of interest and redemption of the bonds.
Chapter 9 Solutions
Cornerstones of Financial Accounting
Ch. 9 - Prob. 1DQCh. 9 - What is the difference between a bond and a note?...Ch. 9 - What does the face (or Par) value of a bond...Ch. 9 - Prob. 4DQCh. 9 - What is the stated or coupon rate of a bond?Ch. 9 - Prob. 6DQCh. 9 - How does a secured bond differ from an unsecured...Ch. 9 - Prob. 8DQCh. 9 - Prob. 9DQCh. 9 - Prob. 10DQ
Ch. 9 - Prob. 11DQCh. 9 - Prob. 12DQCh. 9 - Prob. 13DQCh. 9 - Prob. 14DQCh. 9 - Prob. 15DQCh. 9 - Prob. 16DQCh. 9 - Prob. 17DQCh. 9 - Prob. 18DQCh. 9 - Prob. 19DQCh. 9 - Prob. 20DQCh. 9 - Prob. 21DQCh. 9 - Prob. 22DQCh. 9 - Which of the following statements regarding bonds...Ch. 9 - Prob. 2MCQCh. 9 - If bonds are issued at 101.25, this means that a...Ch. 9 - What best describes the discount on bonds payable...Ch. 9 - The premium on bonds payable account is shown on...Ch. 9 - When bonds are issued by a company, the accounting...Ch. 9 - Prob. 7MCQCh. 9 - Bonds in the amount of $100,000 with a life of 10...Ch. 9 - Prob. 9MCQCh. 9 - Prob. 10MCQCh. 9 - Prob. 11MCQCh. 9 - Prob. 12MCQCh. 9 - Prob. 13MCQCh. 9 - Prob. 14MCQCh. 9 - Prob. 15MCQCh. 9 - Prob. 16MCQCh. 9 - Which of the following statements regarding the...Ch. 9 - Willow Corporations balance sheet showed the...Ch. 9 - Prob. 19MCQCh. 9 - McLaughlin Corporations balance sheet showed the...Ch. 9 - (Appendix 9A) The bond issue price is determined...Ch. 9 - Cornerstone Exercise 9-22 Reporting Long-Term Debt...Ch. 9 - Cornerstone Exercise 9-23 Issuance of Long-Term...Ch. 9 - Cornerstone Exercise 9-24 Issuance of Long-Term...Ch. 9 - Prob. 25CECh. 9 - Cornerstone Exercise 9-26 Debt Issued at Par On...Ch. 9 - Prob. 27CECh. 9 - Cornerstone ExerciseDebt Issued at a Premium...Ch. 9 - Cornerstone Exercise 9-29 Debt issued at a Premium...Ch. 9 - Cornerstone Exercise Debt Issued at a Premium...Ch. 9 - Prob. 31CECh. 9 - Cornerstone Exercise Bonds Issued at a Discount...Ch. 9 - Prob. 33CECh. 9 - Prob. 34CECh. 9 - Prob. 35CECh. 9 - Prob. 36CECh. 9 - Prob. 37CECh. 9 - Prob. 38CECh. 9 - Cornerstone Exercise Ratio Analysis Watterson...Ch. 9 - Cornerstone Exercise Ratio Analysis Blue...Ch. 9 - Cornerstone Exercise Ratio Analysis Red...Ch. 9 - Prob. 42CECh. 9 - Cornerstone Exercise (Appendix 9A) Bond Issue...Ch. 9 - Prob. 44BECh. 9 - Brief Exercise Issuance of Long-Term Debt Natalie...Ch. 9 - Prob. 46BECh. 9 - Prob. 47BECh. 9 - Brief Exercise Debt Issued at Par On January 1,...Ch. 9 - Prob. 49BECh. 9 - Prob. 50BECh. 9 - Brief Exercise Debt Issued at a Premium (Straight...Ch. 9 - Prob. 52BECh. 9 - Prob. 53BECh. 9 - Prob. 54BECh. 9 - Prob. 55BECh. 9 - Brief ExerciseBonds Issued at a Premium (Effective...Ch. 9 - Prob. 57BECh. 9 - Brief Exercise Bonds issued at a Premium...Ch. 9 - Brief Exercise Cost of Debt Financing Topple...Ch. 9 - Prob. 60BECh. 9 - Brief Exercise Ratio Analysis Whitten Corporations...Ch. 9 - Brief ExerciseRatio Analysis Valiant Corporation...Ch. 9 - Brief Exercise Ratio Analysis Trevor Corporation...Ch. 9 - Brief Exercise (Appendix 9A) Bond Issue Price On...Ch. 9 - Prob. 65BECh. 9 - Prob. 66ECh. 9 - Exercise Bond Premium and Discount Markway Inc. is...Ch. 9 - Exercise Bonds with Annual Interest Payments Kiwi...Ch. 9 - Exercise Issuance and Interest Amortization for...Ch. 9 - Prob. 70ECh. 9 - Prob. 71ECh. 9 - Exercise Interest Payments and Interest Expense...Ch. 9 - Prob. 73ECh. 9 - Prob. 74ECh. 9 - Prob. 75ECh. 9 - Prob. 76ECh. 9 - Prob. 77ECh. 9 - Prob. 78ECh. 9 - Prob. 79ECh. 9 - Prob. 80ECh. 9 - Prob. 81ECh. 9 - Prob. 82ECh. 9 - Prob. 83ECh. 9 - Prob. 84ECh. 9 - ExerciseInstallment Notes ABC bank loans $250,000...Ch. 9 - Prob. 86ECh. 9 - Cost of Debt Financing Stinson Corporations cost...Ch. 9 - Cost of Debt Financing Diamond Companys cost of...Ch. 9 - Ratio Analysis Rising Stars Academy provided the...Ch. 9 - Prob. 90ECh. 9 - Problem Reporting Long-Term Debt Fridley...Ch. 9 - Prob. 92PSACh. 9 - Prob. 93PSACh. 9 - Prob. 94PSACh. 9 - Prob. 95PSACh. 9 - Prob. 96PSACh. 9 - Prob. 97PSACh. 9 - Prob. 98PSACh. 9 - Prob. 99PSACh. 9 - Prob. 91PSBCh. 9 - Prob. 92PSBCh. 9 - Prob. 93PSBCh. 9 - Prob. 94PSBCh. 9 - Prob. 95PSBCh. 9 - Prob. 96PSBCh. 9 - Prob. 97PSBCh. 9 - Prob. 98PSBCh. 9 - Prob. 99PSBCh. 9 - Long-Term Debt and Ethics You arc the CFO of...Ch. 9 - Debtholders receive note contracts, one for each...Ch. 9 - Debtholders receive note contracts, one for each...Ch. 9 - Prob. 102.1CCh. 9 - Prob. 102.2CCh. 9 - Prob. 102.3CCh. 9 - Prob. 102.4CCh. 9 - Leverage Cook Corporation issued financial...Ch. 9 - Prob. 103.2CCh. 9 - Prob. 103.3CCh. 9 - Prob. 103.4CCh. 9 - Prob. 104.1CCh. 9 - Prob. 104.2CCh. 9 - Prob. 104.3CCh. 9 - Prob. 104.4CCh. 9 - Prob. 105.1CCh. 9 - Prob. 105.2CCh. 9 - Prob. 105.3CCh. 9 - Prob. 105.4CCh. 9 - Prob. 105.5CCh. 9 - Comparative Analysis: Under Armour, Inc., versus...Ch. 9 - Prob. 105.7CCh. 9 - Prob. 106.1CCh. 9 - Prob. 106.2CCh. 9 - Prob. 106.3C
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Comparative Analysis: Under Armour, Inc., versus Columbia Sportswear Refer to the 10-K reports of Under Armour, Inc., and Columbia Sportswear that are available for download from the companion website at CengageBrain.com. Required: Are debt and equity likely to be available as inflows of cash in the near future?arrow_forwardSport Enterprises have individual accounts for their debtors in a debtors subsidiary ledger and have a debtors control account in the general ledger. The balance of the debtors control account at 1 May 2021 is R169 200. The following information was provided for the month ending 31 May 2021: 1. Journals provided the following totals for relevant transactions: For the month ended 31 May 2021 R Sales journal: Debtors columnSales returns journalCash receipts journal: Debtors columnGeneral Journal: Interest charged on overdue debtors’ accountsGeneral Journal: Debtors balances written off as irrecoverable 762 0006 300586 8002 1002 700 2. The debtors ledger clerk submitted the following : List of debtors balances as at 31 May 2021 – debit balances R C GaleH BoltG HuntI KhuneR Nadal 31 500132 300182 70018 9009 000 3. Additional information to be taken into account (not included in the above): 3.1 No entry has been made for a credit sale of…arrow_forwardReporting liabilities on the balance sheet and computing debt to equity ratio The accounting records of Compass Wireless include the following as of December 31, 2018: Requirements Report these liabilities on the Compass Wireless balance sheet, including headings and totals for current liabilities and long-term liabilities. Compute Compass Wireless’s debt to equity ratio at December 31, 2018.arrow_forward
- Required information [The following information applies to the questions displayed below.] Target Corporation prepares its financial statements according to U.S. GAAP. Target's financial statements and disclosure notes for the year ended February 1, 2020, are available here. This material is also available under the Investor Relations link at the company's website! 5. Assuming Target's industry had an average current ratio of 1.0 and an average debt to equity ratio of 2.5, comment on Target's liquidity and long-term solvency.arrow_forwardClayton Industries has the following account balances: Current assets Noncurrent assets The company wishes to raise $45,000 in cash and is considering two financing options: Clayton can sell $45,000 of bonds payable, or it can issue additional common stock for $45,000. To help in the decision process, Clayton's management wants to determine the effects of each alternative on its current ratio and debt-to-assets ratio. Required a-1. Compute the current ratio for Clayton's management. Note: Round your answers to 2 decimal places. Currently If bonds are issued If stock is issued $ 22,000 Current liabilities 77,880 Noncurrent liabilities stockholders' equity Currently If bonds are issued If stock is issued Current Ratio 2.44 to 1 a-2. Compute the debt-to-assets ratio for Clayton's management. Note: Round your answers to 1 decimal place. Bonds Stock to 1 to 1 Debt to Assets Ratio Additional Retained Earnings $ 9,000 50,000 48,888 % % % b. Assume that after the funds are invested, EBIT…arrow_forwardPlease assist with the following: Required: use the information provided below to prepare the following: 2.1 The correct Debtors Control Account properly balanced for May 2021. 2.2 Reconciliation of the debtors list with the debtors control account for themonth ended 31 May 2021. Sport Enterprises have individual accounts for their debtors in a debtors subsidiary ledger and have a debtors control account in the general ledger. The balance of the debtors control account at 1 May 2021 is R169 200. The following information was provided for the month ending 31 May 2021:1. Journals provided the following totals for relevant transactions: For the month ended 31 May 2021: R Sales journal: Debtors column- 762 000Sales returns journal- 6 300Cash receipts journal: Debtors column- 586 800General Journal: Interest charged on overdue debtors’ accounts- 2 100General Journal: Debtors balances written off as irrecoverable- 2 700 2. The debtors ledger clerk submitted the following : List of…arrow_forward
- The accounting records of Route Maker Wireless include the following as of December 31, 2024: (Click the icon to view the accounting records.) Requirements 1. Report these liabilities on the Route Maker Wireless balance sheet, including headings and totals for current liabilities and long-term liabilities. Compute Route Maker Wireless's debt to equity ratio at December 31, 2024. 2. Requirement 1. Report these liabilities on the Route Maker Wireless balance sheet, including headings and totals for current liabilities and long-term liabilities. Route Maker Wireless Balance Sheet (Partial) December 31, 2024 Plus: Total Liabilities ← Data table Accounts Payable Mortgages Payable (long-term) Interest Payable Bonds Payable (long-term) Total Stockholders' Equity $ 69,000 80,000 14,000 58,000 175,000 Print Salaries Payable Bonds Payable (current portion) Premium on Bonds Payable Unearned Revenue (short-term) Done S 8,500 24,000 9,000 3,300 Xarrow_forwardClass book: Fundamentals of Corporate Finance by Brealey, Myers, and Marcus Financial Statements. South Sea Baubles has the following (incomplete) balance sheet and income statement. Balance Sheet At End of Year (Figures in $ millions) Assets 2018 2019 Liability and Shareholders' Equity 2018 2019 Current assets $ 90 $140 Current Liabilities $ 50 $ 60 Net fixed assets 800 900 Long-term debt 600 750 Income Statement, 2019 (Figures in $ millions) Revenue…arrow_forwardA Preparation of Ratios Refer to the financial statements for Burch Industries in Problem 12-89A and the following data. Required: 1. Prepare all the financial ratios for Burch for 2019 and 2018 (using percentage terms where appropriate and rounding all answers to two decimal places). 2. CONCEPTUAL CONNECTION Explain whether Burchs short-term liquidity is adequate. 3. CONCEPTUAL CONNECTION Discuss whether Burch uses its assets efficiently. 4. CONCEPTUAL CONNECTION Determine whether Burch is profitable. 5. CONCEPTUAL CONNECTION Discuss whether long-term creditors should regard Burch as a high-risk or a low-risk firm. 6. Perform a Dupont analysis (rounding to two decimal places) for 2018 and 2019.arrow_forward
- Debt Management Ratios Glow Corporation provides annual and quarterly financial data to the public. For the years of 2018 and 2019. Glows financial data included the following account balances: Required: Determine whether the debt to equity ratio is increasing or decreasing and whether Glow should be concerned.arrow_forwardDebt investment transactions, available-for-sale valuationSoto Industries Inc. in an athletic foot ware company that beganoperations on January 1, Year 1. The following transactions relate to debtinvestments acquired by Solo Industries Inc., which has a fiscal yearending on December 31: Instructions1. Journalize the entries to record these transactions.2. If the bond portfolio is classified as available for sale, what impactwould this have on financial statement disclosure?arrow_forwardAnalyze your company’s liability section of the comparative balance sheets. Has the composition of current and long-term liabilities changed significantly over the period? Explain? Liabilities and Equity sections of Walmart's Balance Sheet As of January 31, (Amounts in millions) 2019 2018 LIABILITIES AND EQUITY Current liabilities: Short-term borrowings $ 5,225 $ 5,257 Accounts payable 47,060 46,092 Accrued liabilities 22,159 22,122 Accrued income taxes 428 645 Long-term debt due within one year 1,876 3,738 Capital lease and financing obligations due within one year 729 667 Total current liabilities 77,477 78,521 Long-term debt 43,520 30,045 Long-term capital lease and financing obligations 6,683 6,780 Deferred income taxes and other 11,981 8,354 Total liabilities 139,661 123,700arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningManagerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
- Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:CengageFinancial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Topic 6 - Financial statement analysis; Author: drdavebond;https://www.youtube.com/watch?v=uUnP5qkbQ20;License: Standard Youtube License