Justin Company Has Total Assets, Liabilities, and Shareholders' Equity of $36,000

Essay

Justin Company has total assets, liabilities, and shareholders' equity of $36,000, $15,000, and $21,000, respectively, at the beginning of 2010. At the end of 2010, total assets, liabilities, and shareholders' equity were reported at $32,000, $13,000, and $19,000, respectively. How much additional debt can Justin Company incur and still have its debt/equity ratio remain less than or equal to 1.00?
a. $6,000
b. $25,000
c. $12,000
d. $24,000