Compute Pack Leader Wireless’s debt to equity ratio at December 31, 2018

Definition: Reporting liabilities on the balance sheet and computing debt to

equity ratio

The accounting records of Pack Leader Wireless include the following as of

December 31, 2018:

Accounts Payable $ 77,000 Salaries Payable $ 7,500

Mortgages Payable (long-term) 73,000 Bonds Payable (current portion) 25,000

Interest Payable 18,000 Premium on Bonds Payable 10,000

Bonds Payable (long-term) 63,000 Unearned Revenue (short-term) 2,700

Total Stockholders’ Equity 140,000

Requirements

2. Compute Pack Leader Wireless’s debt to equity ratio at December 31, 2018.

Solutions

Expert Solution

Step-by-Step Solution

Step 1: Definition of the salaries payable

The salaries payable are those salaries that are due not paid. The salary is the amount that the company needs to pay its employees. The salaries payable is the amount that is not paid till the end of the year.

Step 2: Calculation of debt-equity ratio

The debt-to-equity ratio of the company is 1.45

Sahil Dangi answered 2 years ago

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