Question

The accounting records of Compass Point Wireless include the following as of December​ 31, 2016​:

Accounts Payable 71,000 Salaries Payable 10,500
Mortgages Payable (long term) 80,000 Bonds Payable(current portion) 24,000
Interest Payable 17,000 Premium on Bonds Payable 10,000
Bonds Payable (long term) 64,000 Unearned Revenue (short-term) 2,400
Total Stockholders Equity 160,000
Requirements
1. Report these liabilities on the Compass Point Wireless balance​ sheet, including headings and totals for current liabilities and​ long-term liabilities.
2. Compute Compass Point ​Wireless's debt to equity ratio at December​ 31, 2016.

Answer 1

1, Compass Point Wireless

Balance sheet (partial)

Current Liabilities: $

Accounts Payable 71,000

Interest Payable 17,000

Salaries Payable 10,500

Unearned Revenue 2,400

Current Portion of Bonds payable 24,000

Total current Liabilities $ 124,900

Long term Liabilities $

Mortgage Payable 80,000

Bonds Payable 64,000

Premium on Bonds Payable 10,000

Total long term liabilities $154,000

Total liabilities = Total current Liabilities + Total long term liabilities

= $ 124,900 + $154,000

= 278900

2. Debt Stockholders' equity Debt to equity ratio

278,900 160,000 1.74

Note: Debt to equity ratio = Debt / Stockholders' equity