Please answer the questions and SHOW YOUR WORK.   

 

 

Mel Co. Balance sheet - Before Investment at 12/31/23

Mel Co.
Balance Sheet - Before Investment
12/31/2023
Cash		5,000		Accounts payable	5,000
Accounts receivable		15,000		Accrued Expenses	2,000
Inventory		20,000		Short-term Notes Payable	5,000
Current Assets		40,000		Current Liabilities	12,000
				Long-term Notes payable	48,000
				Total liabilities	60,000
Property, Plant & Equip.		120,000		Stockholders' Equity
Less:  Accum. Depreciation		50,000		Paid in capital	40,000
P P & E, net		70,000		Retained earnings	10,000
				Total Stockholders' Equity	50,000
Total Assets		110,000		Total liabilities and equity	110,000
2023 Net Income		5,000
Stock Price at 12/31/23		25
Shares Outstanding		1,000
Will make a $80,000 investment in P P & E on 12/31/23 financed by:
l	Borrowing $60,000
l	Issuing stock for the remainder
1.	How many shares will we issue?
2.	What is debt to equity (liabilities to equity) before we make the investment?
3.	What will debt to equity (liabilities to equity) be after we make the investment?
4.	What will total assets be after we make the investment?
5.	What is earnings per shares (EPS) before the investment?
6.	What will EPS be after the investment?  (Before any additional interest expense; use year-end share amount)