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

Quizplus · Accepted Answer

The debt to assets ratio is calculated by dividing total liabilities by total assets. In this case, total liabilities are $100,000 and total assets are $300,000, resulting in a ratio of 33% ($100,000/$300,000). Therefore, the best choice is C.

The Following Partial Balance Sheet Is Provided for Groome Company