Solution-Calculate debt-to-equity ratio and interest

Calculate debt-to-equity ratio and interest coverage ratio

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Reference no: EM132587403

White Ltd has adjusted trial balance as follows on 30 June 2020.

	Debit	Credit
Cash	1,280,000
Service fee revenue		81,000
Account receivable	650,000
Prepaid insurance expense	55,000
Equipment	980,000
Accumulated depreciation-Equipment		305,000
Salaries expense	753,000
Depreciation expense	21,000
Accounts payable		281,000
than		730,000
Capital		400,000
Drawings	15,000
Retained earnings!		310,000
Rent expense	23,000
Sales		7,021,000
Rent revenue		6,000
Cost of goods sold	4,100,000
Prepaid rent expense	71,000
Inventory	430,000
Accrued service fee revenue	11,000
Insurance expense	25,000
Interest expense	50,000
Commission expense	670,000
	9134.000	9 134 000

Required:

Question (a) Prepare the closing entries.

Question (b) Calculate debt-to-equity ratio and interest coverage ratio, and comment on the solvency of the company.

Question (c) Prepare reversing entries, assuming prepaid expenses are originally record as expenses.

Reference no: EM132587403

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Calculate debt-to-equity ratio and interest coverage ratio

Reference no: EM132587403

Reference no: EM132587403

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