E1-15 Classifty items as assets, liabilities, and stockholders\' equity, and pre
ID: 2608155 • Letter: E
Question
E1-15 Classifty items as assets, liabilities, and stockholders' equity, and prepare accounting equation Suppose the following items were taken from the balance sheet of Nike, Inc. (All items are in millions.) 1. Cash 2 Accounts receivable 3. Common stock 4. Notes payable 5. Buildings 6. Mortgage payable $2,291 $2,884 $2,874 $343 $3,760 $1,312 7. Inventory 8. Income taxes payable 9. Equipmert 10. Retained earnings $5,819 11. Accounts payable $2,816 $2,357 $86 $1,958 Instructions (a) Classify each of these items as an asset, liability, or stockholders' equity and determine the tota dollar amount for each classification. Determine Nike's accounting equation by calculating the value of total assets, total liabilities, and total stockholders' equity To what extent does Nike rely on debt versus equity financing? (b) (c)Explanation / Answer
Answer
a.
Assets
Cash
2,291
Accounts Receivable
2,884
Inventory
2,357
Equipment
1,958
Buildings
3,760
Total Assets
13,250
Liabilities
Notes Payable
343
Accounts Payable
2,816
Mortgage payable
1,312
Income Taxes payable
86
Total Liabilities
4,557
Stockholder's Equity
Common Stock
2,874
Retained Earnings
5,819
Total Stockholder's Equity
8,693
b.
Assets
=
Liabilities
+
Stockholder's Equity
13,250
=
4,557
+
8,693
c.
Assets financed by Debt = Total Liabilities / Total Assets
Assets financed by Equity = Total Equity / Total Assets
Total Liabilities
4,557
Total Assets
13,250
Assets financed by Debt
34.39%
Total Equity
8,693
Total Assets
13,250
Assets financed by Equity
65.61%
Assets
Cash
2,291
Accounts Receivable
2,884
Inventory
2,357
Equipment
1,958
Buildings
3,760
Total Assets
13,250
Liabilities
Notes Payable
343
Accounts Payable
2,816
Mortgage payable
1,312
Income Taxes payable
86
Total Liabilities
4,557
Stockholder's Equity
Common Stock
2,874
Retained Earnings
5,819
Total Stockholder's Equity
8,693
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