Question

Thrillville has $40.3 million in bonds payable. One of the contractual agreements in the bond is that the debt to equity ratio cannot exceed 2.0. Thrillville total assets are $80.3 million, and its liabilities other than the bonds payable are $10.3 million. The company is considering some additional financing through leasing. Calculate total stockholer's equity using the balance sheet equation.

Answer 1

$29.7 million

Step-by-step explanation:

In this question, we apply the accounting equation which is shown below:

Total assets = Total liabilities + stockholder equity

$80.3 million = $50.6 million + stockholder equity

So, the stockholder equity = $80.3 million - $50.6 million

= $29.7 million

The total liabilities is computed below:

= Bonds payable + its liabilities other than the bonds payable

= $40.3 million + $10.3 million

= $50.6 million