Problem 2-3A Computing net income from equity analysis, preparing a balance shee

Question

Problem 2-3A Computing net income from equity analysis, preparing a balance sheet, and computing the debt ratio L.O. C2, A1, A2, P3

The accounting records of Fabiano Distribution show the following assets and liabilities as of December 31, 2010 and 2011.

Late in December 2011, the business purchased a small office building and land for $225,000. It paid $120,000 cash toward the purchase and a $105,000 note payable was signed for the balance. Mr. Fabiano had to invest $35,000 cash in the business (in exchange for stock) to enable it to pay the $120,000 cash. The business also pays $3,000 cash per month for dividends.

Problem 2-3A Part 3

Compute the 2011 year-end debt ratio for the business. (Round your answer to 2 decimal places. Omit the "%" sign in your response.)

The accounting records of Fabiano Distribution show the following assets and liabilities as of December 31, 2010 and 2011.

Explanation / Answer

(105,000+37500)/470400 Debt Ratio = 30.29%

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