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138) Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books: 1. Andrea invested $13,500 cash in the business. 2. Andrea contributed $20,000 of photography equipment to the business. 3. The company paid $2,100 cash for an insurance policy covering the next 24 months. 4. The company received $5,700 cash for services provided during January. 5. The company purchased $6,200 of office equipment on credit. 6. The company provided $2,750 of services to customers on account. 7. The company paid cash of $1,500 for monthly rent. 8. The company paid $3,100 on the office equipment purchased in transaction #5 above. 9. Paid $275 cash for January utilities. Based on this information, the balance in the A. Apple, Capital account reported on the Statement of Owner's Equity at the end of the month would be: A) $31,400. B) $39,200. C) $31,150. D) $40,175. E) $30,875. 139) The debt ratio is used: A) To measure the ratio of equity to expenses. B) To assess the risk associated with a company's use of liabilities. C) To assess market expectations for future growth. D) To determine how efficient the company is using its assets. E) To determine the profitability of a company. 140) Identify the correct formula below used to calculate the debt ratio. A) Total Equity/Total Liabilities. B) Total Liabilities/Total Equity. C) Total Liabilities/Total Assets. D) Total Assets/Total Liabilities. E) Total Equity/Total Assets. 141) Langley has a debt ratio of 0.3 and its competitor, Appleton, has a debt ratio equal to 0.7. Determine the statement below that is correct. A) Appleton finances a smaller percentage of its assets with liabilities as compared to Langley. B) Appleton's financial leverage is less than Langley's financial leverage. C) Appleton's financial leverage is greater than Langley's financial leverage. D) Langley has a higher risk from its financial leverage E) Higher financial leverage involves lower risk.

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