On October 1, Ebony Ernst organized Ernst Consulting and contributed $71,500 in assets in exchange for common stock to launch the business.

On October 31, the company's records show the following items and amounts.

Cash	$ 11,250		Cash Dividends	$ 2,000
Accounts Receivable	25,000		Consulting Revenues	25,000
Office Supplies	1,200		Rent Expense	4,500
Land	28,000		Salaries Expense	10,000
Office Equipment	18,000		Telephone Expense	850
Accounts Payable	5,000		Miscellaneous Expense	700
Common Stock	71,500

Calculate the Ratio of Liabilities to Stockholders’ Equity

What does the ratio say about this company's ability to pay its creditors? Is their ratio good or does it need improvement? If it needs improvement, what do you recommend the owner to do?

Complete the Statement of Retained Earnings.

Answer rating: 100% (QA)

Answers Solution 1 Debt Equity ratio Ratio of Liabilities to Stockholders Equity Debt Equity 5000 71... View the full answer