10) Calculate the debt ratio using the following trial balance of Harmony Instruments Company as of December 31, 2017. Harmony Instruments, Inc. Trial Balance December 31, 2017 Account Title Debit Credit Cash $88,800 Accounts Receivable 5,000 Office Supplies 3,400 Equipment 2,000 Building 16,500 Land 70,000 Accounts Payable $15,000 Notes Payable 60,000 H. Harmony, Capital 50,000 H. Harmony, Withdrawals 1,200 Service Revenue 72,000 Utilities Expense 4,100 Salaries Expense 4,000 Advertising Expense 2,000 Total $197,000 $197,000 Answer: Accounts Payable $15,000 Notes Payable 60,000 Total Liabilities $75,000 Accounts Receivable $5,000 Building 16,500 Cash 88,800 Equipment 2,000 Land 70,000 Office Supplies 3,400 Total assets $185,700 Debt ratio = Total liabilities / Total assets Debt ratio = $75,000 / $185,700 = 0.40 or 40% Diff: 3 LO: 2-5 AACSB: Application of knowledge AICPA Functional: Measurement PE Question Type: Application H2 : How Do You Use the Debt Ratio to Evaluate Business Performance? (H1) Horngrens Accounting 11th Edition Miller-Nobles Test Bank Full download at:
10) Calculate the debt ratio using the following trial balance of Harmony Instruments Company as of December 31, 2017. Harmony Instruments, Inc. Trial Balance December 31, 2017 Account Title Cash Debit $88,800 Credit Accounts Receivable 5,000 Office Supplies 3,400 Equipment 2,000 Building 16,500 Land Accounts Payable 70,000 $15,000 Notes Payable 60,000 H. Harmony, Capital H. Harmony, Withdrawals Service Revenue Utilities Expense 1,200 4,100 50,000 72,000 Salaries Expense 4,000 Advertising Expense 2,000 Total Answer: Accounts Payable $197,000 $15,000 $197,000 Notes Payable 60,000 Total Liabilities $75,000 Accounts Receivable $5,000 Building 16,500 Cash 88,800 Equipment 2,000 Land 70,000 Office Supplies 3,400 Total assets $185,700 Debt ratio = Total liabilities / Total assets Debt ratio = $75,000 / $185,700 = 0.40 or 40% Diff: 3 LO: 2-5 AACSB: Application of knowledge AICPA Functional: Measurement PE Question Type: Application H2 : How Do You Use the Debt Ratio to Evaluate Business Performance? (H1) Horngrens Accounting 11th Edition Miller-Nobles Test Bank Full download at: