At June 1, 2019 Left Company reported assets of $624,000 and liabilities of $447

Question

 At June 1, 2019 Left Company reported assets of $624,000 and liabilities of $447,000. Left Company recorded the following transactions during the month of June:  a. On June 1, the company spent $36,000 cash to purchase a 1-year insurance    policy.  b. The company purchased inventory on account. The cost of the inventory    was $43,000.  c. The company sold common stock to owners in the amount of $26,000.  d. On June 30, Left Company recorded the adjusting entry for the prepaid    insurance that was used up during June.  Calculate Left Company's debt-to-equity ratio at June 30 after the four transactions above have been recorded. Enter your answer as a number with two places after the decimal point (i.e., 6.78). Carmen may convert this to three places after the decimal point, which is fine.

Explanation / Answer

Calculate debt to equity ratio :

-36000

+36000

Debt to equity ratio = 490000/200000 = 2.45

Assets = Liabilities + Equity Beginning balance 624000 = 447000 + 177000 a

-36000

+36000

b +43000 +43000 c +26000 +26000 d -3000 -3000 Total 690000 490000 200000

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