Please Refer to the Following Information and Compute the Debt

question 21

Multiple Choice

Please refer to the following information and compute the debt ratio: $$\begin{array} { | l | r | r | } \hline & { \text { Debit } } & { \text { Credit } } \\\hline \text { Cash } & \$ 4,500 & \\\hline \text { Accounts receivable } & 1,200 & \\\hline \text { Prepaid rent } & 700 & \\\hline \text { Land } & 20,000 & \\\hline \text { Equipment } & 4,000 & \\\hline \text { Accumulated depreciation } & & \$ 800 \\\hline \text { Accounts payable } & & 2,900 \\\hline \text { Salary payable } & & 600 \\\hline \text { Notes payable-long term } & & 9,000 \\\hline\end{array}$$

• A) 1.83
• B) 2.37
• C) 0.40
• D) 0.42

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