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21 April, 19:01

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?

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  1. 21 April, 19:04
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    66.25%

    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%
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