On December 31, 2010, Cocoa Incorporated had total liabilities of $80,000 and total shareholders' equity of $100,000, resulting in a debt/equity ratio of 0.80 before executive bonus expense is recognized. During 2010, Cocoa's CEO earned a 5% bonus on net income before bonus of $100,000. If Cocoa pays the bonus due its CEO on December 31, 2010, what is Cocoa's debt/equity ratio after the bonus expense and what related liability is recognized?
Correct Answer:
Verified
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Q84: Harrison Inc. issues community concert season tickets
Q89: State laws generally require insurance companies to
Q90: During the 1990's, Golden Inc. entered into
Q90: Explain why short-term notes often have a
Q91: What concerns might exist when a company's
Q91: Farley Incorporated instituted a defined benefit pension
Q92: On December 31, 2010, Stanley Co. had
Q92: How do 'determinable' current liabilities differ from
Q96: On December 31, 2009, Carlson Incorporated had
Q97: Howell Incorporated current income statement and December
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents