Case Solutions Fundamentals of Corporate Finance Ross, Westerfield, and Jordan 9th Edition

18521 WordsDec 9, 201275 Pages
Case Solutions Fundamentals of Corporate Finance Ross, Westerfield, and Jordan 9th edition CHAPTER 1 THE McGEE CAKE COMPANY 1. The advantages to a LLC are: 1) Reduction of personal liability. A sole proprietor has unlimited liability, which can include the potential loss of all personal assets. 2) Taxes. Forming an LLC may mean that more expenses can be considered business expenses and be deducted from the company’s income. 3) Improved credibility. The business may have increased credibility in the business world compared to a sole proprietorship. 4) Ability to attract investment. Corporations, even LLCs, can raise capital through the sale of equity. 5) Continuous life. Sole proprietorships have a limited life,…show more content…
& equity |$215,168 | In the first year, equity is not given. Therefore, we must calculate equity as a plug variable. Since total liabilities & equity is equal to total assets, equity can be calculated as: Equity = $215,168 – 46,794 – 79,235 Equity = $89,139 | |Balance sheet as of Dec. 31, 2009 | | |Cash |$27,478 | | | Accounts payable |$36,404 | | |Accounts receivable |16,717 | | | Notes payable |15,997 | | |Inventory |37,216 | | | Current liabilities |$52,401 | | |Current assets |$81,411 | | | | | | | | | | | Long-term debt |$91,195 | | |Net fixed assets |$191,250 | | | Owners' equity |129,065 | | |Total

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