The aim of this information. It must be completed for submission on Wednesday 25
ID: 2600247 • Letter: T
Question
The aim of this information. It must be completed for submission on Wednesday 25 October 2017. No credit given for work submitted late. 5 marks will be allocated for successful completion of this assignment J Sharp invested 56 000 cash in the business during year 2011 (the December 31 2010, credit balance of Required: Prepare the income statement for the calendar-year 2011. Prepare the statement of owner's equity for the calendar-year 2011. Prepare the classified balance sheet at December 31, 2011.(Be sure to list the assets and liabilities in order of their liquidity). 1- 2- 3- 4 Prepare the necessary closing entries at December 31, 2011. 5- Use the information in the financial statements to compute the following ratios: a) Current ratic b) Debt to equity ratio, and c) Times interest earned ratio.Explanation / Answer
1-
Income statement
professional fee earned
102000
less operating expenses
depreciation expense-building
12980
depreciation equipment
7500
wages expenses
25500
insurance expenses
8900
rent expense
13000
supplies expense
6400
postage expense
2500
repairs expense
8800
telephone expense
1500
utilities expense
3200
total of operating expense
90280
operating profit
11720
rent earned
16000
interest earned
2700
dividend earned
2700
less interest
4200
less property taxes expense
4400
net income
24520
2-
statement of share holders equity
J capital
123800
additional capital
6000
add net income
24520
less drawings
10000
shareholders equity
144320
3-
Balance Sheet
Assets
current assets
cash
6000
short term investment
22000
supplies
9600
prepaid insurance
8100
total of current assets
45700
equipment net of accumulated depreciation
25000
building net of accumulated depreciation
118000
land
58320
total of assets
247020
liabilities and shareholders
current liabilities
accounts payable
18000
interest payable
2800
rent payable
3100
wages payable
2700
property taxes payable
900
unearned professional fee
7700
total of current liabilities
35200
long term notes payable
67500
total of liabilities
102700
shareholders equity
144320
total of liabilities and shareholders equity
247020
4-
CLOSING ENTRIES
explanation
debit
credit
professional fee earned
102000
rent earned
16000
interest earned
2700
dividend earned
2700
income summary
123400
income summary
98880
depreciation expense-building
12980
depreciation equipment
7500
wages expenses
25500
insurance expenses
8900
rent expense
13000
supplies expense
6400
postage expense
2500
property taxes
4400
repairs expense
8800
telephone expense
1500
interest expense
4200
utilities expense
3200
income summary
24520
j capital
24520
5-
current ratio
current assets/current liabilities
45700/35200
1.298295
debt to equity ratio
total liabilities/total equity
102700/144320
0.711613
time interest earned
ebit/interest
11700/4200
2.785714
1-
Income statement
professional fee earned
102000
less operating expenses
depreciation expense-building
12980
depreciation equipment
7500
wages expenses
25500
insurance expenses
8900
rent expense
13000
supplies expense
6400
postage expense
2500
repairs expense
8800
telephone expense
1500
utilities expense
3200
total of operating expense
90280
operating profit
11720
rent earned
16000
interest earned
2700
dividend earned
2700
less interest
4200
less property taxes expense
4400
net income
24520
2-
statement of share holders equity
J capital
123800
additional capital
6000
add net income
24520
less drawings
10000
shareholders equity
144320
3-
Balance Sheet
Assets
current assets
cash
6000
short term investment
22000
supplies
9600
prepaid insurance
8100
total of current assets
45700
equipment net of accumulated depreciation
25000
building net of accumulated depreciation
118000
land
58320
total of assets
247020
liabilities and shareholders
current liabilities
accounts payable
18000
interest payable
2800
rent payable
3100
wages payable
2700
property taxes payable
900
unearned professional fee
7700
total of current liabilities
35200
long term notes payable
67500
total of liabilities
102700
shareholders equity
144320
total of liabilities and shareholders equity
247020
4-
CLOSING ENTRIES
explanation
debit
credit
professional fee earned
102000
rent earned
16000
interest earned
2700
dividend earned
2700
income summary
123400
income summary
98880
depreciation expense-building
12980
depreciation equipment
7500
wages expenses
25500
insurance expenses
8900
rent expense
13000
supplies expense
6400
postage expense
2500
property taxes
4400
repairs expense
8800
telephone expense
1500
interest expense
4200
utilities expense
3200
income summary
24520
j capital
24520
5-
current ratio
current assets/current liabilities
45700/35200
1.298295
debt to equity ratio
total liabilities/total equity
102700/144320
0.711613
time interest earned
ebit/interest
11700/4200
2.785714
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