Balance sheets for tran enterprises

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Reference no: EM13523156

Below are the 2007 and 2008 year-end balance sheets for Tran Enterprises:

Assets :

2008

2007

Cash

$ 200,000

$ 170,000

Accounts receivable

864,000

700,000

Inventories

2,000,000

1,400,000

Total current assets

$3,064,000

$2,270,000

Net fixed assets

6,000,000

5,600,000

Total assets

$9,064,000

$7,870,000

Liabilities and equity:



Accounts payable

$1,400,000

$1,090,000

Notes payable

1,600,000

1,800,000

Total current liabilities

$3,000,000

$2,890,000

Long-term debt

2,400,000

2,400,000

Common stock

3,000,000

2,000,000

Retained earnings

664,000

580,000

Total common equity

$3,664,000

$2,580,000

Total liabilities and equity

$9,064,000

$7,870,000

The firm has never paid a dividend on its common stock, and it issued $2,400,000 of 10-year, non-callable, long-term debt in 2007. As of the end of 2008, none of the principal on this debt had been repaid. Assume that the company's sales in 2007 and 2008 were the same. Which of the following statements must be CORRECT?

a. The firm increased its short-term bank debt in 2008.

b. The firm issued long-term debt in 2008.

c. The firm issued new common stock in 2008.

d. The firm repurchased some common stock in 2008.

e. The firm had negative net income in 2008.

Reference no: EM13523156

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