Recent balance sheets of Gateway, Inc. (producer and marketer of personal computers and PC-related products), are provided.

Required: 1. Is Gateway a corporation, sole proprietorship, or partnership? Explain the basis of your answer. 2. Use the company's balance sheet to determine the amounts in the accounting equation

(A = L + SE) for 2000. 3. Calculate the company's financial leverage ratio. Interpret the ratio that you calculated. What other information would make your interpretation more useful? 4. Give the journal entry the company will make when it pays its accrued liabilities. 5. Does the company appear to have been profitable over its years in business? On what account are you basing your answer? Assuming no dividends were paid, how much was net income in 2000?

If impossible to determine without an income statement, state so.

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ASSETS GATEWAY INC. Consolidated Balance Sheets December 31, 2000 and 1999 (in millions) 2000 1999 Current assets Cash and cash equivalents $ 484 $1.128 Marketable securities 130 209 Accounts receivable 545 646 Inventory 315 192 Other 793 522 Total current assets 2.267 2.697 Property, plant and equipment, net 897 746 Intangibles Other assets 166 52 822 460 $4.152 $3,955 Liabilities and Stockholders' Equity Current liabilities Accounts payable $ 785 $ 899 Accrued liabilities 556 609 Accrued royalties. 139 154 Other current liabilities 151 148 Total current liabilities 1.631 1,810 Other long-term obligations 141 128 Total liabilities 1.772 1.938 Stockholders' equity: Contributed capital 723 608 Retained earnings 1.657 1.409 Total stockholders' equity 2.380 2.017 $4.152 $3.955