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Help Save & Exi $9,100 White $14,000 values Lia b-2. Which company is more financially stable? K Prev 3 of 4 Next >

Homework 1-A Help Save & Exi 3 b-2. Which company is more financially stabl Allen 2 White c. Assume Allen incurs a $7,100 operating proceeds are distributed to the creditor g loss. The remaining assets are sold for the value shown on the books, and the cash s and investors. How much money will be paid to creditors and how much will be paid to assets are Amount to paid cr d. Assume White incurs a $7100 operating loss. The remaining assets are sold for the value shown on the books and the cash proceeds are distributed to the creditors and investors. How much money will be paid to creditors and how much will be paid to Amount to paid creditors Amount tn naid investors < Prey 3 of 4lI Next >

d. Assume White incurs a $7100 operating loss. The remaining assets are sold for the value shown on the books, and the cash proceeds are distributed to the creditors and investors. How much money will be paid to creditors and how much will be paid to investors? Amount to paid creditors Amount to paid investors < Prev 3 of 4 Next > DYLL

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Answer #1

Answer to Part a No, White cant pay dividend of $5,600, as it doesnt have sufficient balance in Retained Earnings to declare Dividend Answer to Part b-1 Stockholders Equit Compan Allen White Assets |= | Liabilities |+ | Common Stock|+ | Retained Earnings 100% 100% 70% 25% |+ 20% 10% 50% 25% Calculation Allen Assets-$13,000 / $13,000 * 100-100% Liabilities $9,100 / $13,000 * 100 70% Common Stock-$2,600 / $13,000 * 100-2096 Stockholders Equity-$1,300 / $13,000 * 100-10% White Assets-$14,000 / $14,000 * 100 100% Liabilities : $3,500 / $14,000 * 100-25% Common Stock-$7,000 / $14,000 * 100-50% Stockholders Equity-$3,500 / $14,000 * 100-25% Answer to Part b-2. White is more Stable as it has more amount available for Stockholders in the form of Retained Earnings

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