After all events have been recorded, Lang's obligations to creditors represents what percent of total assets?
a).record the events under an accounting equation
b. After all events have been recorded, Lang's obligations to creditors represents what percent of total assets?
c. After all events have been recorded, Lang's stockholder's equity represents what percent of total assets?
d. Assume the debt is due. Given that Lang has $6,000 in stockholder's equity, can the company repay the creditors at this point? Why or Why not?
To answer these questions, we need to record the events under an accounting equation and use the information to calculate the percentages and assess the company's ability to repay the creditors. Here's how we can approach each question:
a) To record the events under an accounting equation:
The accounting equation represents the relationship between a company's assets, liabilities, and equity. The equation is as follows:
Assets = Liabilities + Stockholder's Equity
Start by listing all the events that impact the company's assets, liabilities, and stockholder's equity. For each event, determine whether it increases or decreases the respective elements of the accounting equation. Record the impact by entering the corresponding increase or decrease in each category.
b) To calculate the percentage of Lang's obligations to creditors as a percentage of total assets:
After recording the events, you can determine the obligations to creditors by looking at the liabilities section of the accounting equation. Divide the obligations to creditors by total assets and multiply by 100 to calculate the percentage.
c) To calculate the percentage of Lang's stockholder's equity as a percentage of total assets:
Similarly, after recording the events, you can determine the stockholder's equity by looking at the equity section of the accounting equation. Divide the stockholder's equity by total assets and multiply by 100 to calculate the percentage.
d) To assess if the company can repay the creditors given $6,000 in stockholder's equity:
Compare the total obligations to creditors (liabilities) to the stockholder's equity. If the obligations to creditors exceed the stockholder's equity, the company may have difficulty repaying the creditors. If the stockholder's equity equals or exceeds the obligations to creditors, the company may be able to repay the creditors.
By following these steps, you can record the events, calculate the percentages, and assess the company's ability to repay its creditors.