Question

Accounts Payable 420 Accounts Receivable 3,200 Capital Stock 240 Cash 100 Cost of Goods Sold 600...

Accounts Payable

420

Accounts Receivable

3,200

Capital Stock

240

Cash

100

Cost of Goods Sold

600

Inventory

380

Long-term Debt

4,640

Net Income

280

Property, Plant, and Equipment (net)

1,400

Retained Earnings

(220)

Sales

3,000

Note: The retained earnings amount reported is as of the END of the year (after the closing entries have been made). In this problem, the retained earnings amount is NEGATIVE.

Compute DEBT-TO-EQUITY RATIO.

Group of answer choices

232.0

0.05

253.0

0.98

1.09

Business   Accounting   
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Homework Answers

Answer #1

Accounts Payable = 420

Long-term Debt = 4,640

Total liabilities = Accounts Payable + Long-term Debt

= 420 + 4,640

= 5,060

Capital stock = 240

Retained earnings = -220

Equity = Capital stock + Retained earnings

= 240 - 220

= 20

DEBT-TO-EQUITY RATIO = Total liabilities/Equity

= 5,060/20

= 253

Third option is the correct option

Other information given in the question is not relevant to calculate DEBT-TO-EQUITY RATIO, hence it has been ignored

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