Assume Warren Brown of Cake Love wishes to expand but needs a ($30,000) loan. The bank requests
Question:
Assume Warren Brown of Cake Love wishes to expand but needs a \($30,000\) loan. The bank requests Warren to prepare a balance sheet and key financial ratios. Warren has not kept formal records but is able to provide the following accounts and their amounts as of December 31, 2008:
Required 1. Prepare a balance sheet as of December 31, 2008, for Cake Love. (You need only report the total equity amount on the balance sheet.)
2. Compute Cake Love’s debt ratio and its return on assets (the latter ratio is defined in Chapter 2).
Assume average assets equal its ending balance.
3. Do you think the prospects of Cake Love repaying a \($30,000\) bank loan are good? Why or why not?
Step by Step Answer:
College Accounting Ch 1-14
ISBN: 9781260904314
1st Edition
Authors: John Wild, Vernon Richardson, Ken Shaw