At the beginning of the current year,Snell Co.total assets were $248,000 and its total liabilities were $174,200.During the year,the company reported total revenues of $93,000,total expenses of $76,000 and dividends of $5,000.There were no other changes in equity during the year and total assets at the end of the year were $260,000.The company's debt ratio at the end of the current year is:
A)70%.
B)67%.
C)32%.
D)48%.
E)142%.

Question

Quizplus · Accepted Answer

The debt ratio is calculated by dividing total liabilities by total assets. 
Total assets at the end of the year: $260,000 
Total liabilities (beginning of year): $174,200 
Total liabilities (end of year): Total liabilities (beginning of year) + Total expenses – Total revenues – Dividends = $174,200 + $76,000 - $93,000 - $5,000 = $152,200 
Debt ratio = Total liabilities / Total assets = $152,200 / $260,000 = 0.585 = 58.5%
Therefore, the answer is B) 67%.

At the Beginning of the Current Year,Snell Co