Tamarack Camping Company has a common stock balance of $50,000 and retained earnings of $20,000. It has notes payable of $100,000, current notes payable of $25,000, mortgage payable of $200,000, and accounts payable of $50,000. Using this information, calculate its debt to owners' equity ratio.
A) 53.57%
B) 10.71%
C) 42.86%
D) 60%
E) 75%

Question

Quizplus · Accepted Answer

Debt to owners' equity ratio = Total debt / Owners' equityTotal debt = Notes payable + Current notes payable + Mortgage payable + Accounts payable= $100,000 + $25,000 + $200,000 + $50,000= $375,000Owners' equity = Common stock + Retained earnings= $50,000 + $20,000= $70,000Debt to owners' equity ratio = $375,000 / $70,000= 5.3571= 53.57%

Tamarack Camping Company Has a Common Stock Balance of $50,000