Exam 8: Accounting for Financing Transactions

Identify the effect(s) on the debt/equity ratio (a through c) as a result of each transaction numbered below.You may use each letter more than once or not at all. -Payment required on an operating lease

List two distinct examples of financing activities.

Select the effect (a, b, or c) that each transaction listed in would most likely cause on the debt/equity ratio. -Issued debt to finance the purchase of property

Identify the effect(s) on the debt/equity ratio (a through c) as a result of each transaction numbered below.You may use each letter more than once or not at all. -Acquired the use of equipment under a capital lease

Management wishes to obtain financing.For each attribute/characteristic listed in 1 through 5, determine which type of financing it describes from management's perspective . -Cash flows are discretionary

Management wishes to obtain financing.For each attribute/characteristic listed in 1 through 5, determine which type of financing it describes from management's perspective . -Contractual restrictions

Select the effect (a, b, or c) that each transaction listed in would most likely cause on the debt/equity ratio. -Paid the previously declared dividends

Select the effect (a, b, or c) that each transaction listed in would most likely cause on the debt/equity ratio. -Used money resulting from profits to finance the purchase of property

Haggar Corp's $1 par value, common stock was selling for $20 per share.Haggar Corp's owners' equity accounts were as follows: How many shares of common stock are outstanding?

Select the effect (a, b, or c) that each transaction listed in would most likely cause on the debt/equity ratio. -Issued common stock to finance the purchase of property

Select the effect (a, b, or c) that each transaction listed in would most likely cause on the debt/equity ratio. -Declared and paid a 10% stock dividend

Identify the effect(s) on the debt/equity ratio (a through c) as a result of each transaction numbered below.You may use each letter more than once or not at all. -Paid the interest portion of the payment on a capital lease

Select the effect (a, b, or c) that each transaction listed in would most likely cause on the debt/equity ratio. -Declared dividends to shareholders

Select the effect (a, b, or c) that each transaction listed in would most likely cause on the debt/equity ratio. -Declared and paid a 200% stock dividend

Identify the effect(s) on the debt/equity ratio (a through c) as a result of each transaction numbered below.You may use each letter more than once or not at all. -Acquired the use of equipment under an operating lease

Management wishes to obtain financing.For each attribute/characteristic listed in 1 through 5, determine which type of financing it describes from management's perspective . -Credit rating effects

Select the effect (a, b, or c) that each transaction listed in would most likely cause on the debt/equity ratio. -Distributed a two-for-one stock split

Tanner Corporation shareholders' equity section of its balance sheet as of December 31, 2008 is as follows: The following events occurred during 2009: March 3 - 5,000 shares of authorized and unissued common stock were sold for $22 per share. March 16 - Declared a cash dividend of $3 per share payable May 15 to holders of record on May 5. A. At March 31, 2009, how many more shares of stock can be issued? B. At March 31, 2009, how many shares are issued and outstanding?

Management wishes to obtain financing.For each attribute/characteristic listed in 1 through 5, determine which type of financing it describes from management's perspective . -Contractual future payments

Metallic Paper Corporation has the following balance sheet accounts immediately preceding an investing and financing decision: A long-term debt covenant specifies that Metallic Paper's debt/equity ratio cannot be greater than 1.0 and its current ratio must be at least 2.0. Metallic Paper is going to invest $70,000 in new equipment.It is considering two methods of financing the investment.It can use $10,000 of its own money and obtain $60,000 from the issue of long-term debt.Alternatively, Metallic Paper can use $15,000 of its own money and obtain the remaining financing from the issue of stock. A.Recalculate the balance sheet amounts given above for each of the two financing alternatives immediately after financing is achieved and the investment is undertaken. B.Use numerical calculations to determine if the debt covenants are respected under each of the two financing alternatives.If the covenants are broken for each alternative, suggest financing options that Metallic Paper might use to finance the $70,000 investment in equipment.