The following partial balance sheet is provided for Groome Company: What is the company's debt to assets ratio (rounded to nearest whole percent)?
$$\begin{array}{l}\begin{array} { | l | r | }
\hline \text { Liabilities and Stockholders' Equity }\
\hline \text { Accounts payable } & \$ 9,000 \
\hline \text { Salaries payable } & 12,000 \
\hline \text { Bonds payable (Due in 2020) } & 20,000 \
\hline \text { Common stock, no par } & 30,000 \
\hline \text { Retained earnings } & 54,000 \
\hline \text { Total liabilities and stockholder' equity } & \$ \quad 125,000 \
\hline \text { Total liabilities and stockholder' equity }&\$125,000\ \hline
\end{array}
\end{array}$$
A)49%
B)16%
C)33%
D)Cannot be determined with the information given.

Question

The following partial balance sheet is provided for Groome Company: What is the company's debt to assets ratio (rounded to nearest whole percent)?
$$\begin{array}{l}\begin{array} { | l | r |  } 
\hline \text { Liabilities and Stockholders' Equity }\
\hline \text { Accounts payable } & \$  9,000 \
\hline \text { Salaries payable } & 12,000 \
\hline \text { Bonds payable (Due in 2020) } & 20,000 \
\hline \text { Common stock, no par } & 30,000 \
\hline \text { Retained earnings } & 54,000 \
\hline \text { Total liabilities and stockholder' equity } & \$ \quad 125,000 \
\hline \text { Total liabilities and stockholder' equity }&\$125,000\ \hline
\end{array}
\end{array}$$
A)49%
B)16%
C)33%
D)Cannot be determined with the information given.

Quizplus · Accepted Answer

The debt to assets ratio is calculated as Total Liabilities divided by Total Assets. Total Liabilities = $9,000 + $12,000 + $20,000 = $41,000. Total Assets = Total Liabilities and Stockholders' Equity = $125,000. Debt to Assets Ratio = $41,000 / $125,000 = 0.328 or 33% when rounded to the nearest whole percent.

The Following Partial Balance Sheet Is Provided for Groome Company