Below are the year-end balance sheets for Lowell Enterprises: Assets: 2018 2017 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...

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Finance

Below are the year-end balance sheets for LowellEnterprises:
Assets:
2018
2017
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

Lowell has never paid a dividend on its common stock, and it issued$2,400,000 of 10-year non-callable, long-term debt in 2017. As ofthe end of 2018, none of the principal on this debt had beenrepaid. Assume that the company's sales in 2017 and 2018 were thesame. Which of the following statements must be CORRECT?
Lowell increased its short-term bank debt in 2018.
Lowell issued long-term debt in 2018.
Lowell issued new common stock in 2018.
Lowell repurchased some common stock in 2018.
Lowell had negative net income in 2018.

Answer & Explanation Solved by verified expert

4.1 Ratings (738 Votes)

1 There is no short term debt taken by the company from bank as per the bank If notes payable represents debt to bank it has declined from previous year Therefore the See Answer

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Below are the year-end balance sheets for LowellEnterprises:Assets:20182017Cash$ 200,000$ 170,000Accounts receivable864,000700,000Inventories2,000,0001,400,000 Total current assets$3,064,000$2,270,000Net fixed assets6,000,0005,600,000Total assets$9,064,000$7,870,000Liabilities and equity:Accounts payable$1,400,000$1,090,000Notes payable1,600,0001,800,000 Total current liabilities$3,000,000$2,890,000Long-term debt2,400,0002,400,000Common stock3,000,0002,000,000Retained earnings 664,000 580,000 Total common equity$3,664,000$2,580,000Total liabilities and equity$9,064,000$7,870,000Lowell has never paid a dividend on its common stock, and it issued$2,400,000 of 10-year non-callable, long-term debt in 2017. As ofthe end of 2018, none of the principal on this debt had beenrepaid. Assume that the company's sales in 2017 and 2018 were thesame. Which of the following statements must be CORRECT?Lowell increased its short-term bank debt in 2018.Lowell issued long-term debt in 2018.Lowell issued new common stock in 2018.Lowell repurchased some common stock in 2018.Lowell had negative net income in 2018.

Assets:	2018	2017
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

		Lowell increased its short-term bank debt in 2018.
		Lowell issued long-term debt in 2018.
		Lowell issued new common stock in 2018.
		Lowell repurchased some common stock in 2018.
		Lowell had negative net income in 2018.