X Company prepares monthly financial statements. The following transactions occurred on September 1: paid the premium for the first year of a $5,000, four-year insurance policy,
paid cash for equipment that cost $20,000; the equipment has a life of four years and salvage value at that time of $2,000, and
borrowed $28,000 from a bank that will be repaid on December 31, along with interest of $117 per month.
The accountant made entries to record the transactions on September 1 and the adjustments on September 30. How was Net Income in September affected by these entries.
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Anew firm is developing its business plan. it will require $615,000 of assets, and it projects $450,000 of sales and $355,000 of operating costs for the first year. management is reasonably sure of these numbers because of contracts with its customers and suppliers. it can borrow at a rate of 7.5%, but the bank requires it to have a tie of at least 4.0, and if the tie falls below this level the bank will call in the loan and the firm will go bankrupt. what is the maximum debt ratio the firm can use? (hint: find the maximum dollars of interest, then the debt that produces that interest, and then the related debt ratio.)a. 41.94%b. 44.15%c. 46.47%d. 48.92%e. 51.49%