The adjusted trial balance for Carey Corporation at December 31, 2024, contained 

Accounts payable ..................................................................$ 76,000 

Interest expense ....................................................................$ 49,568

Accounts receivable.................................................................. 89,000 

Interest payable........................................................................ 30,000 

Allowance for doubtful accounts ..............................................4,450 

Lease liability ..............................................................................99,869 

Bonds payable, due 2029 ....................................................1,000,000 

Notes payable ..........................................................................158,666 

Income tax expense.................................................................. 74,353 

Notes receivable, due December 2026.................................. 65,000 

Income tax payable ..................................................................37,176 

Unearned revenue ....................................................................25,000

Of the lease liability amount, $22,800 is due within the next year. Total payments on the instalment note payable in 2025 will be $24,400, of which $7,480 is for interest. Total assets are $2,594,031 and profit for the year was $173,500. 

Instructions 

a. Prepare the liabilities section of the balance sheet. 

b. Calculate Carey’s debt to total assets and interest coverage ratios for the year ended December 31, 2024. 

c. Based on the ratios calculated in part (b), what conclusions can you make about Carey’s solvency?

Are long-term creditors more concerned with solvency or liquidity? Explain.