Question

The adjusted trial balance for Tybalt Construction as of December 31, 2018, follows.

TYBALT CONSTRUCTION Adjusted Trial Balance December 31, 2018
No.	Account Title	Debit				Credit
101	Cash	$	7,500
104	Short-term investments		22,000
126	Supplies		9,200
128	Prepaid insurance		8,600
167	Equipment		55,000
168	Accumulated depreciation—Equipment					$	27,500
173	Building		162,000
174	Accumulated depreciation—Building						54,000
183	Land		64,470
201	Accounts payable						16,000
203	Interest payable						2,000
208	Rent payable						3,200
210	Wages payable						2,700
213	Property taxes payable						900
233	Unearned professional fees						7,100
251	Long-term notes payable						69,500
307	Common stock						7,500
318	Retained earnings, December 31, 2017						123,300
319	Dividends		12,600
401	Professional fees earned						103,000
406	Rent earned						17,500
407	Dividends earned						2,200
409	Interest earned						2,800
606	Depreciation expense—Building		11,880
612	Depreciation expense—Equipment		8,250
623	Wages expense		27,500
633	Interest expense		3,500
637	Insurance expense		9,400
640	Rent expense		12,300
652	Supplies expense		5,700
682	Postage expense		2,200
683	Property taxes expense		3,700
684	Repairs expense		6,900
688	Telephone expense		2,800
690	Utilities expense		3,700
	Totals	$	439,200			$	439,200

The December 31, 2017, credit balance of the Retained Earnings account was $123,300. Tybalt Construction is required to make a $7,000 payment on its long-term notes payable during 2019.

Required:
1a. Prepare the income statement for the calendar-year 2018.
1b. Prepare the statement of retained earnings for the calendar-year 2018.
1c. Prepare the classified balance sheet at December 31, 2018.
2. Prepare the necessary closing entries at December 31, 2018.
3. Use the information in the financial statements to compute the following ratios:

Use the information in the financial statements to compute the following ratios:

(a) Return on assets (total assets at December 31, 2017, was $200,000) Numerator: / Denominator: = Return on total assets Net income / Total assets = Return on total assets 0 (b) Debt ratio Numerator: / Denominator: = Debt ratio / = Debt ratio 0 (c) Profit margin ratio (use total revenues as the denominator) Numerator: / Denominator: = Profit margin / = Profit margin 0 % (d) Current ratio Numerator: / Denominator: = Current ratio / = Current ratio 0

Prepare the classified balance sheet at December 31, 2018.

TYBALT CONSTRUCTION Balance Sheet December 31, 2018 Assets Current assets Cash $7,500 Short-term investments 22,000 Supplies 9,200 Prepaid insurance 8,600 Total current assets $47,300 Equipment 55,000 Accumulated depreciation—Equipment 27,500 27,500 Building 162,000 Accumulated depreciation—Building 54,000 108,000 199,970 $335,470 382,770 Accounts payable 16,000 Interest payable 2,000 Rent payable 3,200 Wages payable 2,700 Property taxes payable 900 Unearned professional fees 7,100 Current portion of long-term notes payable 7,000 Total current liabilities $38,900 Long-term notes payable 62,500 Total liabilities 101,400 Equity Common stock 7,500 Retained earnings 138,370 Total equity 145,870 Total liabilities and equity $247,270

Answer 1