1. The total cost of the equipment is $800 000. NK is considering two different sources offinance:• (Option A) a seven-year $720 000 bank loan.• (Option B) selling S800 000 in shares.Financial information for NK, for the year ending 31 May 2014:CashS176 000Cost of goods sold$3 900 000Creditors$230 000DebtorsS674 000ExpensesS3 800 000Interest$120 000Loan capitalNet fixed assets$2 600 000Retained profit$970 000Share capital$300 000Sales revenue$8 200 000Short-tem borrowing$270 000Stock$320 000Тах$70 000Using data from the table:(a) calculate loan capital X (show all your working);(b) construct a fully labelled balance sheet for NK;(e) calculate NKs gross profit margin (show all your working);(d) calculate NK's forecasted gearing ratio for Option A and for Option B (showall your working)

Financial statement: Financial statements are organized summaries of detailed information about the…

1. The total cost of the equipment is $800 000. K is considering two different sources of finance: • (Option A) a seven-year $720 000 bank loan. •(Option B) selling S800 000 in shares. Financial information for NK, for the year ending 31 May 2014: Cash S176 000 Cost of goods sold $3 900 000 Creditors $230 000 Debtors $674 000 Expenses $3 800 000 Interest $120 000 Loan capital Net fixed sets $2 600 000 Retained profit $970 000 Share capital $300 000 Sales revenue $8 200 000 Short-term borrowing $270 000 Stock $320 000 Tax $70 000 Using data from the table: (a) calculate loan capital X (show all your working); (b) construct a fully labelled balance sheet for NK: (e) calculate NK's gross profit margin (show all your working); (d) calculate NK's forecasted gearing ratio for Option A and for Option B (show all your working).

1. The total cost of the equipment is $800 000. K is considering two different sources of finance: • (Option A) a seven-year $720 000 bank loan. •(Option B) selling S800 000 in shares. Financial information for NK, for the year ending 31 May 2014: Cash S176 000 Cost of goods sold $3 900 000 Creditors $230 000 Debtors $674 000 Expenses $3 800 000 Interest $120 000 Loan capital Net fixed sets $2 600 000 Retained profit $970 000 Share capital $300 000 Sales revenue $8 200 000 Short-term borrowing $270 000 Stock $320 000 Tax $70 000 Using data from the table: (a) calculate loan capital X (show all your working); (b) construct a fully labelled balance sheet for NK: (e) calculate NK's gross profit margin (show all your working); (d) calculate NK's forecasted gearing ratio for Option A and for Option B (show all your working).

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 10RE

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