Between January 28, 2020 and October 28, 2020, Delaney's Fine Shoes Company achieved a saving position of
Question:
Between January 28, 2020 and October 28, 2020, Delaney's Fine Shoes Company achieved a saving position of $400,000 but experienced the following changes in its assets and liabilities of interest. The company invested in $475,000 worth of renovations and purchases of new equipment at both its Montreal and Toronto facilities, sold $100,000 worth of another company’s stocks and bought $50,000 worth of Canada savings bonds. It also decreased its bank deposits by $50,000, and had to pay off a short-term debt of $25,000 that had become due at the time.
Using the flow-of-funds equation,
(i) Determine how much new borrowing the company might have contracted to achieve the stated changes in its financial position. Using the TWO METHODS discussed in class (Accountants’ method and Economists’ Method),
(ii) Set up the company's flow-of-funds statements for the stated period in 2017;
(iii) Determine if the company was a net debtor or net creditor during the stated period and calculate by how much such an amount might have been.
Expert Answer:
1 New borrowings of company With the purchase of equipment 475000 effects to the out flow of fund... View the full answer
