Gerrard Construction Company wishes to lease some new earth moving
Gerrard Construction Co. is an excavation contractor. The following summarized data (in thousands) are taken from the December 31, 2007, financial statements:
FOR THE YEAR ENDED DECEMBER 31, 2007:
Net Revenue....................... ...$16,100
Cost of Services Provided..........5,700
Depreciation expense...............3,250
Operating Income....................$7,150
Interest Expense......................1,900
Income Tax expense.................1,600
Net Income..............................$3,650
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AT DECEMBER 31, 2007
ASSETS
Cash and short-term investments..................$1,400
Accounts receivable, net...............................4,900
Property, plant, and equipment, net...............38,700
Total Assets................................................$45,000
LIABILITIES AND OWNERS EQUITY
Accounts payable..........................................$750
Income taxes payable.....................................800
Notes payable (long term)...............................23,750
Paid-in capital................................................5,000
Retained earnings..........................................14,700
Total liabilities and owners equity....................$45,000
At December 31,2006 total assets were $41,000 and total owners equity was $16,300. There were no changes in notes payable or paid-in capital during 2007.
Question Number 1 –
Gerrard Construction Company wishes to lease some new earth moving equipment fromCaterpillar on a long-term basis. What impact (increase, decrease, or no effect) would a capital lease of $2 million have on the company's debt ratio and debt/equity ratio?
Question Number 2 –
Calculate the amount of dividends declared and paid during the year ended December 31, 2007 (Hint: Do a T-account analysis of retained earnings.)
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Answers
Status NEW
Posted 07 Jun 2017 03:06 PM
My Price 4.00
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Attachments
file 1496848795-Answer.docx preview (318 words )
G-----------err-----------ard----------- Co-----------nst-----------ruc-----------tio-----------n C-----------o. -----------is -----------an -----------exc-----------ava-----------tio-----------n c-----------ont-----------rac-----------tor-----------. T-----------he -----------fol-----------low-----------ing----------- su-----------mma-----------riz-----------ed -----------dat-----------a (-----------in -----------tho-----------usa-----------nds-----------) a-----------re -----------tak-----------en -----------fro-----------m t-----------he -----------Dec-----------emb-----------er -----------31,----------- 20-----------07,----------- fi-----------nan-----------cia-----------l s-----------tat-----------eme-----------nts-----------: -----------FOR----------- TH-----------E Y-----------EAR----------- EN-----------DED----------- DE-----------CEM-----------BER----------- 31-----------, 2-----------007-----------: -----------Net----------- Re-----------ven-----------ue.-----------...-----------...-----------...-----------...-----------...-----------...-----------...-----------. .-----------..$-----------16,-----------100----------- C-----------ost----------- of----------- Se-----------rvi-----------ces----------- Pr-----------ovi-----------ded-----------...-----------...-----------...-----------.5,-----------700----------- D-----------epr-----------eci-----------ati-----------on -----------exp-----------ens-----------e..-----------...-----------...-----------...-----------...-----------.3,-----------250----------- O-----------per-----------ati-----------ng -----------Inc-----------ome-----------...-----------...-----------...-----------...-----------...-----------...-----------..$-----------7,1-----------50 ----------- In-----------ter-----------est----------- Ex-----------pen-----------se.-----------...-----------...-----------...-----------...-----------...-----------...-----------...-----------1,9-----------00 ----------- In-----------com-----------e T-----------ax -----------exp-----------ens-----------e..-----------...-----------...-----------...-----------...-----------...-----------1,6-----------00
file 1496849100-Answer.docx preview (318 words )
G-----------err-----------ard----------- Co-----------nst-----------ruc-----------tio-----------n C-----------o. -----------is -----------an -----------exc-----------ava-----------tio-----------n c-----------ont-----------rac-----------tor-----------. T-----------he -----------fol-----------low-----------ing----------- su-----------mma-----------riz-----------ed -----------dat-----------a (-----------in -----------tho-----------usa-----------nds-----------) a-----------re -----------tak-----------en -----------fro-----------m t-----------he -----------Dec-----------emb-----------er -----------31,----------- 20-----------07,----------- fi-----------nan-----------cia-----------l s-----------tat-----------eme-----------nts-----------: -----------FOR----------- TH-----------E Y-----------EAR----------- EN-----------DED----------- DE-----------CEM-----------BER----------- 31-----------, 2-----------007-----------: -----------Net----------- Re-----------ven-----------ue.-----------...-----------...-----------...-----------...-----------...-----------...-----------...-----------. .-----------..$-----------16,-----------100----------- C-----------ost----------- of----------- Se-----------rvi-----------ces----------- Pr-----------ovi-----------ded-----------...-----------...-----------...-----------.5,-----------700----------- D-----------epr-----------eci-----------ati-----------on -----------exp-----------ens-----------e..-----------...-----------...-----------...-----------...-----------.3,-----------250----------- O-----------per-----------ati-----------ng -----------Inc-----------ome-----------...-----------...-----------...-----------...-----------...-----------...-----------..$-----------7,1-----------50 ----------- In-----------ter-----------est----------- Ex-----------pen-----------se.-----------...-----------...-----------...-----------...-----------...-----------...-----------...-----------1,9-----------00 ----------- In-----------com-----------e T-----------ax -----------exp-----------ens-----------e..-----------...-----------...-----------...-----------...-----------...-----------1,6-----------00
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