Question

At the beginning of the current year, Snell Co. total assets were $260,000 and its total liabilities were $180,200. During the year, the company reported total revenues of $105,000, total expenses of $82,000 and owner withdrawals of $11,000. There were no other changes in owner's capital during the year and total assets at the end of the year were $272,000. The company's debt ratio at the end of the current year is?

Answer 1

66.25%

Step-by-step explanation:

Total assets = Total liabilities + total equity

Total equity = Total assets - Total liabilities

= $260,000 - $180,200

= $79,800

Beginning equity = $79,800

Equity at the year-end:

= Revenues - Expenses - Withdrawal + Beginning equity

= $105,000 - $82,000 - $11,000 + $79,800

= $91,800

Total assets at end = Total liabilities + Total equity at end

$272,000 = $180,200 + $91,800

$272,000 = $272,000

Debt ratio = Total debt ÷ Total assets

= $180,200 ÷ $272,000

= 0.6625

= 66.25%