Cricket Corporation’s financial statements for 2014 showed the following:
Notice that the company had a debt of only $ 20,000 compared with share capital of $ 200,000. A consultant recommended the following: debt, $ 100,000 (at 10 percent) instead of $ 20,000, and share capital of $ 120,000 (12,000 shares) instead of $ 200,000 (20,000 shares). That is, the company should finance the business with more debt and less owner contribution.
Required (round to the nearest percent):
1. You have been asked to develop a comparison between (a) the actual results and (b) the results based on the consultant’s recommendation. To do this, you decided to develop the following schedule:
2. Based on the completed schedule in (1), provide a comparative analysis and interpretation of the actual results and the consultant’s recommendation.

  • CreatedAugust 04, 2015
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