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Financial Statements under Various Theories of Equity Drake

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Question;15-2;Financial Statements under Various Theories of Equity Drake Company;reported the following for 2008: Current assets $87,000 Current;liabilities 19,000 Revenues 450,000 Cost of goods sold 220,000;Noncurrent assets 186,000 Bonds payable (10%, issued at par) 100,000;Preferred stock, $5, $100 par 20,000 Common stock, $10 par 50,000;Paid-in-capital in excess of par 48,000 Operating expenses 64,000;Retained earnings 36,000 Common stockholders received a $2 dividend;during the year. The preferred stock is noncumulative and;nonparticipating. Required: a. Ignoring income taxes, prepare an income;statement and balance sheet for Drake Company at December 31, 2008, that;is consistent with each of the following theories of equity: i. Entity;theory ii. Proprietary theory iii. Residual equity theory b. For each;theory cited above, compute the December 31, 2008, debt-to- equity;ratio. If none would be computed, discuss why.

 

Paper#39777 | Written in 18-Jul-2015

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