# The following account balances are taken from the records of Monets Garden Inc.: Current liabilities ........... $150,000 Long-term liabilities ......... 375,000 Stockholders equity ......... 400,000 Required 1. Use the information provided to compute Monets debt-to-equity ratio (round to three decimal points). 2. Determine the effect that each of the following transactions will have on Monets debt-to-equity ratio by recalculating the

Chapter 13, Alternate Problems #1

The following account balances are taken from the records of Monet€™s Garden Inc.:

Current liabilities ........... $150,000

Long-term liabilities ......... 375,000

Stockholders€™ equity ......... 400,000

Required

1. Use the information provided to compute Monet€™s debt-to-equity ratio (round to three decimal points).

2. Determine the effect that each of the following transactions will have on Monet€™s debt-to-equity ratio by recalculating the ratio and then indicating whether the ratio is increased, decreased, or not affected by the transaction. (Round to three decimal points.) Consider each transaction independently; that is, assume that it is the only transaction that takesplace.

Current liabilities ........... $150,000

Long-term liabilities ......... 375,000

Stockholders€™ equity ......... 400,000

Required

1. Use the information provided to compute Monet€™s debt-to-equity ratio (round to three decimal points).

2. Determine the effect that each of the following transactions will have on Monet€™s debt-to-equity ratio by recalculating the ratio and then indicating whether the ratio is increased, decreased, or not affected by the transaction. (Round to three decimal points.) Consider each transaction independently; that is, assume that it is the only transaction that takesplace.

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