Calculate the debt ratio using the following trial balance of Harmony Instruments, Inc. as of December 31, 2017
Harmony Instruments, Inc
Trial Balance
December 31, 2017
Account Title Debit Credit
Cash $88,800
Accounts Receivable 5,000
Office Supplies 3,400
Equipment 2,000
Building 16,500
Land 70,000
Accounts Payable $ 15,000
Notes Payable 60,000
Common Stock 50,000
Dividends 1,200
Service Revenue 72,000
Utilities Expense 4,100
Salaries Expense 4,000
Advertising Expense 2,000 _______
Total $197,000 $197,000
What will be an ideal response
Accounts Payable $15,000
Notes Payable 60,000
Total Liabilities $75,000
Accounts Receivable $ 5,000
Building 16,500
Cash 88,800
Equipment 2,000
Land 70,000
Office Supplies 3,400
Total assets $185,700
Debt ratio = Total liabilities / Total assets
Debt ratio = $75,000 / $185,700 = 0.40 or 40%
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