Question

jones enterprises was started when it acquired $6,000 cash from creditors and $10,000 from owners. the company immediately purchased land that cost $12,000. A. record the events under an accounting equation B.) Afetr all events have been recorded, Jones's obligations to creditors represent what percent of total assets C.) after all events have been recorded, Jones stockholders equity represents what percent of total assets? D.) assume the debt is due. given that jones has $10,000 in stock holders' equity can the company repay the creditors at this point? why or why not

Answer 1

Answer:

The answer of each requirement is given below.

A.) record the events under an accounting equation

Accounting equation is given below.

Asset = Equity + Liability

Land + Cash = Equity + liability

12,000 + 4000 = 10,000 + 6,000

16,000 = 16,000

B.) After all events have been recorded, Jones's obligations to creditors represent what percent of total assets

Percentage = 6,000/16,000*100 = 37.5%

C.) after all events have been recorded, Jones stockholders equity represents what percent of total assets?

Equity percentage = 10,000/16,000* 100 = 62.5%

D.) assume the debt is due. given that jones has $10,000 in stock holders' equity can the company repay the creditors at this point? why or why not

No, the company will not be able to pay debt as the company has acquired land of 12,000 dollars and has only 4,000 dollars in liquid form.

Answer 2

A.) The accounting equation

Accounting equation is shown below:

Asset = Equity + Liability

Land + Cash = Equity + liability

12,000 + 4000 = 10,000 + 6,000

16,000 = 16,000

B.)  Jones's obligations to creditors represent what percent of total assets.

Percentage of total assets

= 6,000 / 16,000 * 100

= 37.5%

C.) After all events have been recorded, Jones stockholders equity represents what percent of total assets?

Equity percentage

= 10,000 / 16,000 * 100

= 62.5%

D.) Assume the debt is due. given that jones has $10,000 in stock holders' equity can the company repay the creditors at this point? why or why not

Here, the company will be unable to pay the debt because it has acquired land of $12,000 and have only $4,000 in liquid form.

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